Insider Trading

Insider trading links insider's investment behavior with your stock. The theme of insider trading not only attracts financial literature (see Lorie and Niederhoffer 1968, Jaffe 1974, 1998, Rozeff and Zaman 1988, Lin and How 1990, Lakonishok and Lee 2001), but also the legal economic literature As well. (See, for example, Manna 1966, Georgegakopoulos 1993, and Carlton and Fischel 1983). Financial literature on insider trading first examined strong market efficiency assumptions.

Insider trading One of the most controversial aspects of securities regulation is the concept of insider trading. Which buys and sells securities based on knowledge not available to the public. Among other regulations, the Insider Trading Sanction Law of 1984 and the Insider and Securities Fraud Enforcement Act of 1988 have strict guidelines on the organization of internal information, the type of prohibited transactions and related penalties . Other related federal regulations

There is a fundamental difference between the legal definition of insider trading and economic definition. In this sense insider trading includes all transactions, because insider trading in an economic sense is traded by parties with higher information value than their counterparties. Information is asymmetric with or without securities. On the other hand, insider trading in the legal sense involves purchasing or selling a specific insider within six months, or trading "important" information based on a wider, more intangible insider or its preferences Including that. . Insider trading in an economic sense is not necessarily illegal and the law never attempts to prohibit knowledgeable insiders from doing all transactions.

Insider trading is always a continuing problem in the stock market. Insiders are seeking access to more funds in an illegal way. Insider trading works by knowing someone who is using specific information on company confidential information. This information will definitely affect the stock price. Tell the company's individual investors in front of the public so that they can take action as soon as possible. Insider traders have good advantages because they can earn more money or save money

Insiders will provide more information than you. There are laws in insider trading, but insiders can trade stocks in good faith. If you invest in the United States, the SEC requires that all insider trading be reported within 2 business days. If you see insiders and major shareholders buying more, this is a good sign. Of course, as long as it is not on sale, sales are not necessarily bad. If you know that the company's market is cyclical, these changes may be easier to identify with stocks. Of course, if everyone knows that the company will go up and down in this cycle, there is no opportunity. However, if it is anticipated that the cycle will start or end at time T, not in the market, you can use it as it may react too much to the cycle you missed.