Ace the Canadian Securities Course 2025 - Rock the CSC Practice Exam!

Insider trading is defined as the buying or selling of a company's stock based on information that is not available to the general public. This type of trading is considered unethical and illegal because it violates the principle of transparency in the securities market, giving an unfair advantage to individuals who have access to privileged information.

When an insider, such as a company executive or an employee, uses confidential information that could influence an investor's decision to buy or sell stock, it undermines the integrity of the market and erodes investor confidence. Regulatory authorities, like the Ontario Securities Commission, monitor these activities closely to prevent abuse and maintain fair trading practices.

The other options focus on activities that either do not involve non-public information or do not constitute insider trading under securities regulations. For instance, trading based on public information is legal, as are transactions among friends and colleagues, provided that they are not based on insider information. The illegal sale of confidential company data is a different offense and does not directly relate to the buying or selling of securities.