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Investopedia, an online portal for investor education, in its article "Uncovering Insider Trading" posted on its website (accessed May 20, 2008), wrote:
"The following are examples of illegal insider trading:
The CEO of a company sells a stock after discovering that the company will be losing a big government contract next month.
The CEO's son sells the company stock after hearing from his dad that the company will be losing the big government contract.
A government official realizes that the company will lose a big government contract, so the official sells the stock.
...If someone is caught 'tipping' an outsider with material nonpublic
information, that tipster can also be found liable. The SEC uses the
'Dirks Test' to determine if an insider gave a tip illegally. The test
states that if a tipster breaches his or her trust with the company and
understands that this was a breach, he or she is liable for insider