Trending: insider trading  JUN 17 2014

A new study finds that insider trading is much worse than commonly thought: a quarter of all public company deals may involve some kind of insider trading. From the NY Times:

The professors examined stock option movements -- when an investor buys an option to acquire a stock in the future at a set price -- as a way of determining whether unusual activity took place in the 30 days before a deal's announcement.

The results are persuasive and disturbing, suggesting that law enforcement is woefully behind -- or perhaps is so overwhelmed that it simply looks for the most egregious examples of insider trading, or for prominent targets who can attract headlines.

The professors are so confident in their findings of pervasive insider trading that they determined statistically that the odds of the trading "arising out of chance" were "about three in a trillion." (It's easier, in other words, to hit the lottery.)

Only about 5% of the deals are ever litigated by the SEC. (via mr)

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