Insider trading refers to trading in financial and/or physical markets (for example, trading shares in a company) on the basis of ‘insider information’, which may be illegal. ‘Inside information’ is information that is not generally available including:
- the financial performance of BHP against market expectations
- entry into or termination of a significant contract
- production curtailment or shutdown
- major strategic decisions including actual or proposed mergers or demergers, acquisitions or divestments, or joint ventures
- actual or possible discoveries of, or significant adjustments to ore bodies or oil reserves.
If insider information is made publicly available, a reasonable person would expect it to have a material effect (positive or negative) on the price of the particular securities and influence an investor’s decision making.
In many countries, it is a criminal offense to buy, sell or otherwise deal in securities of a company likely to be impacted by the release of inside information. It may also be a criminal offense to disclose inside information to someone else, if you suspect or have reason to believe that the person is likely to buy, sell or otherwise deal in the relevant securities. Under some circumstances, it is an offense to buy, sell or deal in physical commodities and commodity derivatives on the basis of insider information, or encourage others to do the same.