Which statement best describes insiders?

• A. Individuals with limited company knowledge
• B. All directors and senior officers with potential access to inside information
• C. Preferential shareholders who own less than 5% of the company
• D. All employees without any regard for their position

Answer: (B)

The statement that best describes insiders is that they are all directors and senior officers with potential access to inside information. Insiders typically hold positions within a company that grant them visibility into undisclosed or material information about the company’s operations and strategies. This access can influence their decision-making and behavior, particularly in relation to trading the company's stock, which is why such individuals are subject to strict regulatory scrutiny.

Understanding this definition is essential because it highlights the importance of transparency and fairness in the financial markets. Regulations are in place to prevent insiders from exploiting confidential information for personal gain, which helps maintain investor confidence and market integrity. Other categories mentioned, such as employees without regard to their positions or limited company knowledge, do not encompass the specific characteristics and responsibilities related to insider status. These distinctions are crucial in aligning with the regulations guiding insider trading and corporate governance.