"Insider trading" is a term that most investors have heard and usually associate with illegal conduct. But the term actually includes both legal and illegal conduct.

The legal version is when corporate insiders -- officers, directors, and employees -- buy and sell stock in their own companies.

When corporate insiders trade in their own securities, they must report their trades to the authorities.

Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security.

Insider trading violations may also include "tipping" such information, securities trading by the person "tipped," and securities trading by those who misappropriate such information.

Certain examples of insider trading:

1. Corporate officers, directors, and employees who traded the corporation's securities after learning of significant, confidential corporate developments.

2. Friends, business associates, family members, and other "tippees" of such officers, directors and employees, who traded the securities after receiving such information.

3. Employees of law, banking, brokerage and printing firms who were given such information to provide services to the corporation whose securities they traded.

4. Government employees who learned of such information because of their employment by the government.

5. Other persons who misappropriated, and took advantage of, confidential information from their employers.

Because insider trading undermines investor confidence in the fairness and integrity of the securities markets ...

The authorities are treating the detection and prosecution of insider trading violations as one of their enforcement priorities.