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Finance Glossary

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Over 700 finance terms, Shmooped to perfection.

Covered Party


At Angelina and Brad's wedding, it rained. There was a big tent.... 

The term also refers to liability. It means that if one person is considered an insiderand is banned from insider trading, there may be other people in their life who are also covered by the same laws. If your twin is the CEO of a company, you can't just use her insider information for your own insider trading. 


A couple is married. The husband buys and sells stocks on behalf of the money he and his wife have saved. His wife hears inside information about a big merger happening with her company, where she is CFO. The husband trades on this information and makes a bundle. Unfortunately, there aren't co-ed prisons for this kind of thing. Since he was a covered party, the insider trading laws that applied to her also applied to him... and to them collectively. So they both lose everything, and they can cool their heels in prison for 5–10 with time off for good behavior.