But in reality for most participants, either directly or indirectly involved in the circumstances surrounding the invaluable information, crossing over to the unlawful side of insider trading could be as straightforward as giving your grandmother a tip about a major developments within a company before that information is released to the public, even if you do not trade the stock yourself (Reid)
The further one is away from the primary source of the insider information, the more problematic and challenging cases become. The boundaries of what constitutes legal and illegal insider trading are somewhat ambiguous, the gray area becomes clearer as time goes on and more cases are brought to the surface; each of these cases unique and different, helping to further clarify the differences. "Most insider trading is illegal and is also unethical, not merely because it is illegal, but because, it is claimed, the person who trades on insider information in effect "steals" this information and thereby gains an unjust or unfair advantage over the member of the general public" (Velasquez). .
Typically one can categorize insiders into three factions: (1) registered or true insiders, which include company officials, certain upper level employees, and major stockholders, possessing information not available to the general public; (2) temporary or quazi- insiders, such as accounts or lawyers, persons who are not permanently employed by the company but often have access to valuable nonpublic information, and (3) outside insiders or tippers often friends or family of employees who receive tips from registered or temporary insiders. The consequences of insider trading are, by and large overlooked and scoffed at, and can be relatively severe for both the insider disseminating the information and for the company they are employed by. Indictment for insiders could be civil penalties or criminal penalties or both.