Insider trading

why is having a discussion with a coworker about a private meeting with the company’s ongoing class-action lawsuit an insider trading violation?

I thought insider trading violation has to do with material nonpublic info being released to the public or someone outside the firm?

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All that’s needed to commit an insider trading violation is for someone (whether an insider or outsider) to place a trade based on non-public information. In this scenario, these coworkers are discussing non-public information, and therefore will commit a violation if either places a trade based on that information. Same applies to anyone else in the company.

When non-public information is released publicly, it no longer is considered inside information. Keep in mind this would be different than an insider telling a friend some non-public information. If it’s not available to the general public, it’s still inside information. As soon as it can be accessed by the general public (e.g. in a newspaper or press release), it is no longer consider insider info.