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Also known as insider information, inside information is any type of data that is obtained by someone who is directly involved in the day to day operation of a business or other organization. The individual may be an officer who is entitled to access to the information, or someone within the organizational structure that comes across the information by accident or other means. The designation of inside information is usually reserved for any type of proprietary information that is not disclosed to the general public, but that has the ability to impact any the price of any type of publicly traded stocks or other securities connected with the organization.
The use of inside information in order to influence marker performance or to achieve personal financial gain is often referred to as insider trading. In most countries around the world, this type of abuse of proprietary information is considered illegal, as it can undermine not only the performance of a given stock, but possibly create repercussions that have long-term effects on the market in general. When someone is found to have used inside information to initiate purchases or sales, punitive actions are usually taken. At times, the markets where the stocks are traded take these punitive actions. In countries where insider trading is illegal, there is the possibility of stiff fines as well as serving time in a correctional facility.
There is often some confusion between inside information and what is known as a whisper number. Essentially, a whisper number is information regarding stocks and other securities that has not yet been released to the general public. Data of this type is sometimes distributed by brokerages to their more valuable clients, in anticipation that the information will be released to the public in the near future. What sets the whisper number apart from inside information is that the data may or may not be accurate, since it does not necessarily originate with someone who is in a position of trust with the related organization. In addition, some brokerages choose to not share this data with their clients, especially if they consider the information to be originating from a questionable source.
While the distinction between a whisper number and inside information is very small, there are a number of countries around the world that do have laws against the sharing of insider data, but have no specific laws to address the issue of whisper numbers. In some nations, this is beginning to change, as regulations are put in place that restrict the ways that a corporation shares data. There are even instances today where a brokerage can be subject to a penalty if any type of information is dispensed to a select group of clients before it is made available to the public.