Insider trading is an illegal practice in the investment world where an investor obtains certain information about the potential profit opportunities in buying or selling stocks. The certainty of this information comes from sources within the related company.
Definition of Insider Trading: The trading of securities (selling or buying) by an individual and/or a group of people based on information or material facts that they have known beforehand before such information is disclosed to the public, with the intention of gaining short swing profits in the Capital Market.
Explanation: When insiders from a company have information about events or things that happen within the company, the public as shareholders find it difficult to obtain such information, resulting in an imbalance of information known to the public compared to that held by insiders. Based on such unlawfully obtained information, insiders have the appropriate basis or calculations to carry out trading that is considered unfair to the securities held by the company concerned, as they have access to all information not yet known to the public.
Insider Trading practices are clearly prohibited under Law No. 8 of 1995 concerning Capital Markets (UUPM), which states that insiders of issuers or public companies who have “insider” information are prohibited from buying or selling securities: (a) of the aforementioned issuer or public company, or (b) of other companies that transact securities with the related issuer or public company.
Prevention of Insider Trading Transactions
The company is committed to avoiding insider trading practices by formulating Insider Trading Prevention Policies and a Code of Conduct that regulates the use of information through legal and ethical means in accordance with applicable principles. The company is responsible for realizing sustainable business activities in line with existing values, so that the company can provide optimal feedback to all stakeholders.