You find yourself working for a company (congrats!). It started out as a small startup, giving you shares of the company as part of your benefits package. The small startup has grow to a decent-sized company...and now you want to cash out. You’ll have to do this through an open-market transaction, which, in the U.S., is subject to special rules by the Securities and Exchange Commission (SEC).
An open-market transaction is when an insider (someone on the “inside” of the company) is either buying or selling shares of that same company. Because insider trading isn’t cool, the SEC wants to know why an insider is deciding to sell or buy their shares.
When insiders do open-market transactions en masse, you can be sure outsider-shareholders will be paying close attention. If everyone’s jumping ship and you’re invested in that company, you might want to decide to jump ship and sell your shares, too.
Note: open-market transactions have nothing to do with open-market operations, which is a Federal Reserve, monetary policy thing.