How does insider trading work?

You aren’t describing “insider trading”. Insider trading is making investment decisions on non-public information.

What you are talking about is fencing stolen goods. And finding the buyer of something to be stolen can be difficult. That’s why sometimes thieves take something valuable without thinking through what they’ll do.

Stealing industrial secrets (“industrial espionage”) is not rare. But you usually sell them to a competitor or to another country that wants to jump start an industry.

Selling rare collectibles is more of having to figure out who the dealers in rare books or rare maps or documents are. But collectors don’t want that stuff without a provenance that shows the history of the ownership of the document.

Insider trading is when you know something that will effect the stock price because you’re an “insider” and the rest of the public has no idea. If you buy or sell based on that knowledge you have traded stocks unfairly and illegally. Of course, congress recently snuck an exemption for themselves in there.
What you’re talking about is corporate espionage and I have no idea how spies and contacts connect.

@zenvelo Thanks, I’ll edit the title of the question accordingly.

….or….not…I never understood if one is able to edit the question after you already posted it. For some reason it’s not letting me.

Insider trading is the practice of buying or selling equity in the company (stock trades, in other words) based on not-publicly-known information. Often times there are rumors of company acquisitions by larger companies, or mergers between companies, and this tends to drive up prices. The reason for that is that the acquiring company wants to purchase as many voting shares of the target company in order to assure that if there’s a vote about whether to agree to the takeover they’ll have enough votes to assure passage. And in order to acquire those shares, they’ll pay a premium on top of the market price. As the news starts to leak out that Company “X” may be taking over Company “Y”, the shares of Company “Y” rise on the expectation of a premium to be paid on those shares.

By the time you see those rumors published in the Wall Street Journal or other business periodicals (or on television), it’s “old news” and public. However, the discussions that precede those rumors can go on for months before the news hits the street as rumor or fact. Management insiders who attempt very strenuously to keep the talks secret (because they don’t want to drive up prices of the target company ahead of time and make their buy even more expensive) have a good sense of whether they’ll be successful or not. So an “insider” will sometimes buy (or have family or friends buy) stock in one or both companies in excess of what they might normally buy, based on the near-certainty of a large enough increase in price to make the risk pay off big in the short term.

Industrial espionage is the practice of one company paying a nominal employee of a rival company for trade secrets, recipes, prototypes, business processes or simple sabotage of plant and equipment.

“Taking and then selling something you don’t own” is garden-variety theft.

As it applies to Congress, I believe that “insider trading” is probably not very well named. Since Congress makes the rules that can affect entire industries, such as defense and healthcare, to name a couple that are frequently in the news, and their discussions are also not always as public as they ought to be, Representatives, Senators and their aides and families are also privy to some of the pending legislation that can make or break companies in the industry, and they may buy or sell stock in those industries based on the information. So even though Members of Congress are not “insiders”, per se, their ability to affect industry and business makes them similar to business insiders.

What you are referring to is not insider trading. Insider trading occurs when someone knows something about a company that will affect its stock price )a new product annoncement, the company is planning to sell itself, etc.) Then the person (or someone they tell) uses the insider information before the knowledge is public to manipulate the stock (either buying or selling at a premium).

What you are referring to is industrial espionage for which there are stiff criminal penalties, by the way. As to how someone would go about connecting with a buyer, I doubt it would be on an Internet forum. They would probably think who would be interested in the information that they have (a competitor perhaps) and approach someone at that company.

@marinelife I didn’t really believe there’s an Internet forum. . . that was just a hyperbole.

But I guess my next question involves the obvious risk these guys take in offering to competitors. What makes them think a competitor won’t just raise a red flag and blow the whistle on them?

They might. It’s illegal after all.

You are talking about stealing.