Last week, SCOTUS ruled it's illegal to trade on the free gift of inside information.
- SCOTUS Just Tightened the Insider Trading Rules – Here's What It All Means
- What Is the Difference Between Insider Buying and Insider Trading?
- A U.S. Court Practically Declared Insider Trading Legal
- The Washington-Wall Street "Corruption Corridor"
- Investigation of D.C.-Wall Street Corruption Hits Yet Another Roadblock
- Stocks to Watch: Where Insiders Are Moving Their Money Now
- These Insider Stocks to Buy Now Are Tomorrow's Big Gainers
- What Can You Buy For $616 Million? Not Much, If You're Steven A. Cohen
- STOCK Act: Latest Political Flimflam Won't Stop Worst Abuses
- The STOCK Act: Lawmakers Forced to Admit They Must Obey The Law
- Insider Trading Ban: Congress Really Wants You to Like Them
- Monday's STOCK Act Vote Could End a Major Congressional Perk
- While the Middle Class Suffers, Congress is Getting Richer – With Help From Legal Insider Trading
- Goldman Director Linked to Insider Trading on Buffett Investment
- Airbus and Parent EADS Experience Turbulence Over Insider Trading Scandal
Strong insider buying is one of the most accurate indicators that a stock is headed higher. So whenever we see a stock that has strong insider buying, we alert our readers.
But we frequently hear the same question from readers: What is the difference between insider buying and insider trading?
Wednesday, December 10, 2014, was a great day to be an insider trader.
A three-judge panel of the U.S. Second Circuit Court of Appeals overturned insider trading convictions of former hedge fund managers Todd Newman and Anthony Chiasson.
Not only did the appeals court reverse the much-publicized guilty verdicts against the two traders, its 28-page decision effectively rewrites the meaning of insider trading.
The immediate outcome of the decision not only affects the two hedge fund executives, other traders convicted of insider trading, and charged individuals who pled guilty, it will also change how traders use inside information to their benefit in the future.
There's a new twist in an ongoing U.S. Securities and Exchange Commission (SEC) probe.
For months now, the SEC has been investigating whether anyone in the federal government leaked inside information to a Washington-based investment research firm.
While that was pretty juicy already, those investigators are now looking at up to 44 hedge funds that may have traded on that inside information.
If you already thought our public servants were greedy, dirty, and corrupt, well, this helps prove your case.
If, on the other hand, you think our folks in D.C. are pure, altruistic angels, today I'm going to convince you otherwise... Full Story
There's a new twist in an ongoing U.S. Securities and Exchange Commission probe into D.C.-Wall Street corruption.
For months now, the SEC has been investigating whether anyone in the federal government leaked inside information to a Washington-based investment research firm. And now up to 44 hedge funds that may have traded on that inside information are under close scrutiny.
While just one piece of the investing puzzle, insider buying and selling can provide valuable clues when setting up a stocks to watch list.
When looking at individual stocks, there is a general rule of thumb to follow when looking at insider buying and selling. Mutual fund legend Peter Lynch said it best: "There are many reasons why insiders sell, but only one reason insiders buy." That reason being, of course, that insiders know something about their company that they are certain will drive the stock price higher.
It nearly always pays to follow the insider buying habits of company officers and directors. Research has shown that whenever you have insider buying, the stock tends to outperform the total market by 8.9% over the next 12 months. And so far in 2014,
Steven A. Cohen's SAC Capital Advisors was one of the biggest, most powerful and profitable hedge funds on Wall Street. Cohen himself is a legendary figure, replete with odd, personal eccentricities that are the hallmark of the truly brilliant.
Famous for spending hours as a younger man watching the tape roll by, and for keeping his Stamford, CT, trading floor at a steady 68 degrees, Steve Cohen made billions for his clients - and himself.
Now the sharks are circling, the dominos are falling - nearly any hackneyed metaphor a writer could think of to evoke a doomstruck sentiment applies.
The SEC and Manhattan U.S. Attorney Preet Bharara have pursued Cohen and SAC Capital with a rare, almost indecent zeal. The charge is insider trading, allegations which Cohen vehemently denies, but which the SEC is pursuing.
A majority of members in both chambers of Congress stymied the efforts of a handful of legislators to make a much tougher law that would have done more to restrict how government officials can profit from non-public information learned on the job.
"This is bipartisanship, but it's not the kind of bipartisanship, cooperation, intended or not, that this nation deserves," said Sen. Chuck Grassley, R-IA, during in a 20-minute floor speech before the vote. "Today's actions only serve the desires of obscure and powerful Wall Street interests."
Grassley was among the few to vote against the bill, which passed 96-3.
The Senate passed the House version of the bill unaltered. Back in February both chambers passed different versions of the bill, with the Senate version having the stricter provisions.
But Senate Majority Leader Harry Reid, D-NV, opted to vote on the weaker House version of the bill instead of sending the bill to a conference committee.
The new law will have some effect, albeit a minimal one.
The House voted 417-2 to approve the STOCK Act; the Senate vote last week was 96-3.
You'd think that lawmakers wouldn't need prodding to obey laws that apply to everyone else, but their behavior has said otherwise.
By the legislators' own admission, an insider trading law shouldn't even be necessary.
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The Senate passed the bill in a 96-3 vote. U.S. Rep. Eric Cantor, R-VA, said the House would consider the bill next week. U.S. President Barack Obama pledged to sign it immediately.
Congress members hope the new law will change growing American disgust with Congressional perks and partisanship, which has hammered approval ratings down to the teens.
"The numbers of people who have a favorable impression of this body are so low that we're down to close relatives and paid staff. And I'm not so sure about the paid staff," Sen. Joe Lieberman, I-CT, said earlier this week.
Insider Trading Ban Run Down
The insider trading ban prevents members of Congress, top aides, and administrative officials from using non-public information when trading. Any stock bought or sold must be disclosed in a public report online within 30 days.
Several last-minute amendments added to the insider trading ban include:
The Senate will hold a procedural vote today (Monday) on a bill that prohibits Congress members from using nonpublic information to make stock transactions - known as "insider trading" when conducted by corporate insiders. Today's vote could put a time limit on passing the bill, which the Senate will continue debating this week.
Congress has faced increasing backlash lately for its growing list of financial advantages over the Americans it represents. A CBS News' "60 Minutes" program in November 2011 exposed Congress insider trading - elected representatives trading stocks related to hot topics being debated in Congress before information had been disclosed to the public.
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A Roll Call analysis of Congress members' financial disclosure forms showed their collective net worth was more than $2 billion in 2010 - a 25% leap from 2008. Minimum net worth in the House of Representatives rose to $1.26 billion, with minimum Senate net worth at $784 million.
With a median net worth of $891,506, Congress members are nine times wealthier than the average American household - and some Congressional leaders are exceedingly richer.
About 11% of Congress has net worth of more than $9 million, landing them in the top 1% of America's wealthy.
And these numbers aren't even the whole picture. They don't include members' homes and other non-income-generating property, which could add hundreds of millions of dollars to total net worth.
Congressional leaders' presence in the top 1% is one of the catalysts that angered citizens enough to start the global "Occupy Wall Street" movement. It also has prompted a closer look at how these elected representatives are gaining such riches, especially on an annual salary of $174,000.
According to a CBS News "60 Minutes" segment that aired Nov. 13, congressional "insider trading" might be a key factor in their financial success. Congress members may be using information gained from their "insider" positions to make highly profitable trades in the stock market.
This form of insider trading may be unethical, but it's also legal.
"This is a venture opportunity," Peter Schweizer, a fellow at Stanford University's conservative think tank the Hoover Institution, told "60 Minutes" correspondent Steve Kroft. "This is an opportunity to leverage your position in public service and use that position to enrich yourself, your friends, and your family."
Congressional "Insider Trading"Schweizer has extensively reviewed Congress members' financial disclosure records for his book, "Throw Them All Out," released this week. He wanted to know how our elected representatives manage to accumulate so much wealth while in office.
Schweizer found that congressional representatives were trading stocks related to hot topics being discussed and debated in Congress before information had been disclosed to the public.
"We know that during the health care debate people were trading health care stocks," Schweizer said to Kroft. "We know that during the financial crisis of 2008 they were getting out of the market before the rest of America really knew what was going on."
The new disclosure stems from a government examination into whether Gupta gave inside information to Mr. Rajaratnam about a $5 billion investment Warren Buffett's Berkshire Hathaway (NYSE: BRK.A, BRK.B) made in the Wall Street bank before it became public knowledge.
In a March 22 court filing, the government revealed more details about the information it alleges Rajaratnam received, alleging that he or "co-conspirators" traded on non-public information, including advance notice about the Buffett investment in Goldman.