Insider information

There can be some important news or data accessible to the key employees of the firm. The person who is considered an insider has a legal -contract with the business, which makes them accountable for their actions where they cannot divulge the message which has yet not been released publicly. 

For example – if no one knows what the firm is planning to do with the stock price or if there will be the announcement of any special dividend, such a detail cannot be released by an insider to anyone who is not part of it.

Furthermore, it is an offence to tell it as it can be price-sensitive data, leading to unfair practices in the trade. For example – Giving out false impressions related to supply or demand can lead to distortion of investment.

Investors who know about it have an unfair advantage over others. People who trade based on non-public data are considered guilty of illegal activities. Employees that use secretive reports to obtain profits are called tipper; he is the one who reveals confidential data to an outsider. 

If protected company data is disclosed to unauthorised individuals, it can lead to losses, all the partners, employees and shareholders.

There can be instances where the informer accesses a report through device manipulation or manipulates a transaction. For example, sometimes they contrivance trading or place orders using bogus devices. 

It can be adopted to spread rumours or buy and sell simultaneously to raise the price of stocks. 
Further, it can be used by people to influence the decisions of investors and partners.