Gun Jumping

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Definition of 'Gun Jumping'

Gun jumping is the act of trading on material non-public information. This can include trading on information about a company's upcoming earnings report, a merger or acquisition, or other significant event.

Gun jumping is illegal in most countries, and can result in significant penalties for those who engage in it. The penalties can include fines, imprisonment, or both.

There are a number of reasons why gun jumping is illegal. First, it can give some investors an unfair advantage over others. If one investor has access to material non-public information, they can use that information to make trades that will profit them at the expense of other investors.

Second, gun jumping can undermine the integrity of the financial markets. If investors believe that others are engaging in gun jumping, they may lose confidence in the markets. This can lead to a decrease in trading activity and an increase in volatility.

Third, gun jumping can increase the risk of market manipulation. If investors are able to trade on material non-public information, they may be able to artificially inflate or deflate the price of a security. This can harm other investors and damage the overall health of the markets.

For all of these reasons, gun jumping is illegal in most countries. If you are caught engaging in gun jumping, you could face significant penalties.

Here are some additional examples of gun jumping:

* An investment banker learns that a company is about to announce a major acquisition. The banker then buys shares of the company before the announcement is made.
* A corporate executive learns that the company is about to release a product that is expected to be a major success. The executive then buys shares of the company before the product is released.
* A trader hears a rumor that a company is about to file for bankruptcy. The trader then sells short shares of the company before the news is made public.

These are just a few examples of gun jumping. Any time someone trades on material non-public information, they are engaging in gun jumping.

If you are ever unsure whether you are engaging in gun jumping, it is best to err on the side of caution and not trade. If you have any questions about gun jumping, you should consult with an attorney.

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