insider
Insider is someone, like a company director or top staffer, who has access to important information about a company before the public does.
In plain English
There is a certain kind of gist that travels fast in Nigerian offices. Someone's cousin works at a bank, and two days before the official announcement, half the street already knows the bank is about to declare a huge profit or announce a merger. That cousin, in the eyes of the stock market, is an insider.
An insider is anyone close enough to a company's engine room to see things before the rest of us do. Directors, top executives, and sometimes major shareholders all qualify, because their jobs or their stakes give them a front row seat to information that has not yet reached the public. Think of the finance director of a listed company in Lagos who sees the unaudited results a full month before they hit the NGX website.
Having that seat is not a crime. What becomes a crime, in Nigeria under the Investments and Securities Act and in the United Kingdom under the Financial Services and Markets Act, is using that seat to trade shares before everyone else gets the same news. If our imaginary finance director calmly buys more shares because he knows a bumper profit announcement is coming next week, and then sells once the price jumps, that is insider trading, and it can attract fines or jail time.
The rule exists to protect ordinary people, the market woman who saved up to buy shares in a bank, the Nigerian in London sending money home partly to invest in a family portfolio. None of them can peep into boardrooms. If insiders were free to trade on secrets, the whole game would be rigged before ordinary investors even sat at the table.
This is why listed companies publish a list of insiders and often restrict when directors can buy or sell shares, usually closing that window just before results are announced. It is less about suspicion and more about keeping the field level for everyone watching from outside the glass doors.
A managing director at a Lagos listed company learns three weeks early that annual profit will beat expectations by a wide margin. If he buys ₦4,000,000 worth of shares before the news breaks and sells after the price rises, that trade can be investigated and reversed, with penalties attached, because he traded on information the public did not yet have.
Questions people ask
Is every company director automatically an insider?
Yes, directors and top executives are usually classified as insiders by default, along with anyone else who regularly has access to information that has not yet been made public, such as certain senior managers or advisers.
Can an insider ever legally buy or sell shares in their own company?
Yes, but usually only during approved trading windows, often shortly after results are published, and they must disclose the trade, since the goal is to prevent trading on secret information rather than to ban insiders from investing entirely.
What happens if someone is caught trading on inside information in Nigeria?
The Securities and Exchange Commission can investigate, void the trade, impose fines, and in serious cases refer the matter for criminal prosecution, since insider trading is treated as an offence under the Investments and Securities Act.
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