Insider Trading is a term in the stock whose sense is someone who transacts by getting inside information so that the person gets an abnormal advantage.
This information can make stock price increase and stock price also drop deeper. Usually investors want to get information that provides benefits to these investors.
In practice, insider trading always leads to huge profits. Investors by stocks earlier than other as they gain the privilage of up-to-date information on stock prospects, as well as investors selling stocks due to information that will cause the stock proce to decline. If sold more quickly, the investor does not suffer huge losses.
According to Article 95 of Law Number 8 of 1995 concerning The Capital Market, states : Insider from issuers or Public Companies that have inside information are prohibited from buying or selling securities :
1. Issuers or Public Company referred to, or
2. Any other company engaging in transactions with The Issuers or Public Company concerned.
Futhermore, The Eluciadation of Article 95 of The Act states :
a. Commissioners, directors or employees of The Issuers or Public Company.
b. The principal shareholder of Issuers or Public Company.
c. An invidual who is due to his position or profession or because his or her business relationship with The Issuers or Public Company allows such persons to obtain insider information, or
d. Parties in the last 6(six) months shall no longer be Parties as referred to in letter a, b, or c above.
Indonesia Capital Market Regulations also impose restrictions on influencing others to transact or tip others. Article 96 of Law Number 8 of 1995 concerning The Capital Market states :
Insiders referred to in Article 95 are prohibited :
1. Influence the other Party to make a purchase or before The Securities concerned, or
2. To provide insider information to any Party that may reasonably expect it to use such information to make purchases or sales of Securities.