Who is considered a tippee in the context of insider trading?

In the context of insider trading, a tippee is specifically identified as a person who learns nonpublic information from an insider, often referred to as a "tipper." This relationship is significant because the tippee gains access to privileged information that can affect the trading of securities, which is typically illegal to use for personal financial gain. This concept is rooted in securities law, where the integrity of the market relies on the fair dissemination of information. When a tippee acts on this insider information, both the tipper and the tippee can be held liable for insider trading violations.

The distinction is essential because it clarifies the dynamics of how nonpublic information flows through individuals and underscores the responsibilities that accompany such knowledge. Understanding who a tippee is helps delineate the boundaries within which legal trading must occur and highlights the importance of maintaining ethical standards in financial markets.