Canadian Securities Course (CSC) Level 1 Practice Exam

The correct answer identifies individuals who have access to material, non-public information about a company due to their position or ownership stake. Directors, senior officers, and those who own 10% or more of a company's shares are considered insiders because their roles and investment levels grant them significant insight into the company's affairs that is not available to the general public. This privileged access poses a risk for insider trading, which is why there are regulations in place to monitor their trading activities closely.

In contrast, shareholders with less than 5% ownership typically do not possess enough influence or access to sensitive information to be classified as insiders. External consultants may have access to information but are generally not insiders unless they have a direct role in the company or are explicitly designated by the company. Government officials might have access to certain information, but they do not automatically fall into the insider category without a direct relationship to the company's operations or ownership.