Insider Trading Question

What I’m saying is I think there effectively is no enforcement.

If someone is a moron and buys a huge option position the day before M&A is announced, that’s their fault for being dumb if they get caught.

If Raj wants to pay people and then talk about it on the phone, that’s his bad for being an idiot.

If you are “not retarded” I suppose it would be easy to profitably trade on inside info if you could figure out how to acquire it, and presumably it would be low risk if you traded intelligently in a diversified portfolio and left no paper trail.

I’m not suggesting anyone do that, but I can see how it would be fairly easy if you could somehow get access to the info consistently.

Lack of enforcement does not always mean that people will break the rules. For instance, no one will catch you if you litter every day, but you presumably don’t do it. Similar with insider trading - yes, you will probably not be caught unless you do something quite reckless. However, most people (I believe) are not insider traders. And I think that the whole “spirit of regulation” is responsible for a lot of that.

So not sure if this agrees with you or not. I agree that only maybe 1/20 people have a chance of being caught for insider trading. However, that one prosecuted guy is enough of an example to deter many other people from trying the same thing.

I sort of agree with you, but I think it’s more widespread then you may believe, ohai. I also think the burden of proof to show insider trading is quite high and you have to be very far over the line (wiretaps, cash changing hands, blatantly abusive trading, etc.) to get caught.

It also depends on how you define insider trading.

Yeah, insider trading in other exchanges … to say it’s a huge party would be an understatement.

I was amazed when I read Reminiscences of a Stock Operator. Stuff back then was way different and that wasn’t even that long ago.

Interesting. I thought it had something to do with the Great Wall of China.

It’s not insider trading if you can’t prove it. It depends on how many share did they sell? If they sold a few, then I don’t consitute it as insider trading since they are still the largest shareholder. (i.e. they can easily prove they did not act on the information they received)

It was over two million shares and this is not a penny stock. It was clearly insider trading, but I don’t expect anything to come out of it. Lesson relearned: investment banks are very shady. This bank in particular, which I have seen break the rules at least 3 times over the last 4 years in various ways. They’re also phenomenal at pump and dump in stocks pursuing secondary offerings.