Here the SEC actually resorts to plain English to explain: ""Insider trading" is a term that most investors have heard and usually associate with illegal conduct. But the term actually includes both legal and illegal conduct. The legal version is when corporate insiders—officers, directors, and employees—buy and sell stock in their own companies. When corporate insiders trade in their own securities, they must report their trades to the SEC."
"Examples of insider trading cases that have been brought by the SEC are cases against:
Corporate officers, directors, and employees who traded the corporation's securities after learning of significant, confidential corporate developments;" http://www.sec.gov/answers/insider.htm
In other words: "If a Director buys based on basis of unpublished material information, then he is just as guilty of insider trading as anyone else."
But I think "significant, confidential corporate developments" is just a smidgen less subjective and more descriptive than "unpublished material information".
They are both subjective, unfortunately. That makes the law less enforceable than some might like to see it.
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