Seriously, I want a simple explanation. I see some Morgan Stanley person was sentenced to 7 years in prison. I know Martha did time for that but I still don't understand what she did....do people know what is going to happen..oh, never mind I want to understand but don't get it at all & don't understand why some people are put in prison for it. Thanks

Jack and Jill both work at a bank. Jack is the CEO, and Jill is the Vice President. Jack admits during a board meeting that he just discovered a tumor in his lung. Jack only has 6 months to live, and writes a statement that will be released to the press the next day.

Jill knows that Jack will be doing all this, and knows that when the statement is released, the price of her stock shares will plummet, from $20 a share to 20 cents a share (the price drops because everybody thinks the bank is in trouble, since the CEO is dying, so everybody will sell their stock when they hear about it). So, she sells off all her shares while the price is still high, makes OODLES of cash, and the next day, the price of the shares bottoms out.

That is insider trading - when somebody has confidential information that will eventually become public knowledge, knows that the price of the stock will change, and uses that to his/her benefit.