Insider Trading

RECENT NEWS
MarketWatch  Dec 14  Comment 
The Securities and Exchange Commission filed charges in federal court in San Francisco on Thursday for insider trading against a licensed therapist, Kenneth Peer. Peer is charged with trading in the shares of Zulily, Inc. based on nonpublic...
FiercePharma  Dec 12  Comment 
Valeant and former activist partner Bill Ackman may once again be thwarted in their efforts to get insider trading claims against them tossed. 
Mondo Visione  Dec 11  Comment 
The Securities and Exchange Commission today charged a former day trader with making more than $1 million in illegal insider trading profits as part of a ring that allegedly stole confidential information from investment banks and clients so they...
New York Times  Dec 4  Comment 
Consider the "bargain" timepiece.
Financial Times  Nov 29  Comment 
Technology creates a regulatory minefield and demands a revamp of reporting requirements
New York Times  Nov 29  Comment 
Employees from the agency’s inspector general’s office wanted to modify and sell their own version of proprietary government software, according to investigators.




 
TOP CONTRIBUTORS

Insider Trading

Involves trading of stocks and securities by a group or individuals who might have access to non-publicly available information which could affect the price of the company.

Public

  • The public, legal version of Insider trading involves corporate insiders (owners, directors or employees) buying or selling the company stocks, who report such trades to the SEC as stated in the SEC forms 3,4 and 5. [1]

"Insider trading" is a term subject to many definitions and connotations and it encompasses both legal and prohibited activity. Insider trading takes place legally every day, when corporate insiders – officers, directors or employees – buy or sell stock in their own companies within the confines of company policy and the regulations governing this trading. [2]

Company executives “insiders,” are allowed to buy stocks in there own companies, with there own money, for there own accounts, as much as they want, as long as they declare their transactions publicly. Insiders have the most knowledge of the inner workings and future prospects of their company. There is undoubtedly plenty of important, non-public information influencing insiders’ investment decisions regarding their own firms’ shares.

Sometimes called the “Secret Hobby,” of executives on Wall Street. They have nothing better to do with their lives than figure out where their own company’s stock is headed, and then act on that information for their personal accounts. Insider’s may imagine a big event coming, maybe a few times in their working career. If they can get a pile of liquid capital together, they can trade in there own firms securities.

Although they cannot sell for at least six months, changes in ownership must be received at the SEC by the second business day following the trade, to let investors know how insiders are benefiting from the unfair advantage they have when trading in there own company’s shares.

"Individual investors think – and I passionately believe – that the proverbial little guy' on Main Street should have the same fair chance as the big guys.' [3]

Private

  • Illegal Insider trading involves misappropriation of the non-public information by anyone. This could involve a breach of fiduciary responsibility or confidence while holding on to sensitive data about the company. It also encompasses "tips" and "hints" from a corporate insider to a friend, who now acts on this information.

It is the trading that takes place when those privileged with confidential information about important events use the special advantage of that knowledge to reap profits or avoid losses on the stock market, to the detriment of the source of the information and to the typical investors who buy or sell their stock without the advantage of "inside" information.

Some argue that insider trading is a legitimate form of compensation for corporate employees, permitting lower salaries that, in turn, benefits shareholders. [4]

insider "one in possession of special information by virtue of being within some organization," 1848, from inside + -er (1). Originally in reference to the stock markets. [5]

trade (n.) 14c., "path, track, course of action," introduced by the Hanse merchants, trade "track, course" (probably originally of a trading ship). Sense of "one's habitual business" (1540s) developed from the notion of "way, course, manner of life" (mid-15c.); sense of "buying and selling" is first recorded 1550s. Trade wind (1640s) has nothing to do with commerce, but preserves the obsolete sense of "in a habitual or regular course." Trade union is attested from 1831. [6]

References

  1. SEC information on Insider Trading
  2. [1]
  3. [Arthur Levitt, A Question of Investor Integrity: Promoting Investor Confidence by Fighting Insider Trading, Address Before the "SEC Speaks" Conference, February 27, 1998.]
  4. [2]
  5. [ http://www.etymonline.com/index.php?term=insider]
  6. [3]






References

  1. SEC information on Insider Trading
  2. [4]
  3. [Arthur Levitt, A Question of Investor Integrity: Promoting Investor Confidence by Fighting Insider Trading, Address Before the "SEC Speaks" Conference, February 27, 1998.]
  4. [5]
  5. [ http://www.etymonline.com/index.php?term=insider]
  6. [6]
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki