Is Insider Dealing Still A Problem On Stock Markets?

Discussion in 'General Trading Discussion' started by longtermbull, Aug 4, 2019.

  1. longtermbull

    longtermbull Administrator Staff Member

    Nov 2016
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    Even though the authorities have made great progress in tackling insider dealing, is it still a problem on stock markets? Will it always be a problem?
  2. J_C_Anderson

    J_C_Anderson Senior Investor

    Aug 2018
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    To my mind, insider dealing is not a problem for retail investors. Insiders use relatively small volume so their actions do not influence the price. Sometimes they even use stock options to get additional leverage and to conceal their actions.
    At the same time, financial markets regulating authorities already have quite efficient mechanisms to counter insider dealing. For example, they could check all relatively large deals before the earnings or important news were released. If they will find someone affiliated with the company, they will investigate the way he got the information. That is why it is very difficult for insiders to hide their trades. Sometimes they could even start their operations after the first, "weak" news released prior to important ones to be able to explain the reason of their actions and the information their trading decisions are based on, but even such approach sometimes doesn`t help them to avoid the criminal liablility provided by applicable legislation. So, insider dealing nowadays is almost ceased to exist, so the retail traders should not worry about it.

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