[Aerroon]

But how does this square with rumors? Is trading based on rumors illegal then?

"I heard a rumour that their defect rate is very high for this new product."

Information that isn't meant to be public might still send up circulating sure to mistakes etc. How would you determine whether trading based on it would be legal or not?

[arthurcolle]

Hearing a rumor isn't illegal.

Hearing and trading on a specific statement by an insider at a public company, as an outsider, is insider trading. It's not that complicated