Final answer:
Insider trading involves buying or selling a security based on material nonpublic information, and it is a violation of securities laws and regulations. It is illegal regardless of whether the individual is an employee of the company or not.
Step-by-step explanation:
Insider trading refers to the buying or selling of a security based on material nonpublic information. It is illegal, regardless of whether the individual is an employee of the company or not. Insider trading is considered a violation of securities laws and regulations. It is not a common practice in the financial industry as it is strictly regulated by the Securities and Exchange Commission (SEC) to maintain fairness and protect investors.