Affiliated Person/ Investor

Let’s say you enter the school spelling bee. And so does your older brother Sam, who’s the top-notch linguist in the country. Should you be treated the same? Not hardly fair, is it?

It works the same with securities. When it comes to trading, buying, or selling stocks and other securities, people working inside a company have a leg up when it comes to their own securities. Why? Because they have special insider information. These people—including C-level officers and board members—are considered affiliated persons and they have to follow a bunch of extra laws. If these types own more than 10% of their own company's securities, they're considered affiliated investors and they face even more restrictions.

It all helps level the playing field between insiders and you, the average Joe or Jane investor.   

Find other enlightening terms in Shmoop Finance Genius Bar(f)