Whispers Inside; Thunder Outside:
Uncovering Insider Trading.
Index
I. A GOOD BEGINNING MAKES A GOOD ENDING
II. The evolution
III. THE GOOD, THE BAD, AND THE UGLY
IV. GRAU, TEURER FREUND, IST ALLE THEORIE
V. THINK OUTSIDE THE BOX
VI. Compliance enforcement or witch-hunt
VII. RECOMMENDATIONS
VIII. SHE HATH PURSUED CONcLUSIONS
I. A GOOD BEGINNING MAKES A GOOD ENDING
To many investors, insider trading remains one of those sins covered only by the eleventh commandment: thou shalt not get caught. Indeed, in much of the world, it is only recently that feathering your nest by trading on privileged information about a company has been seen as a crime. [i] The SEC* has been very successful in making this into one of the most egregious evils in the world.
II. The evolution
Insider trading was not considered illegal at the beginning of the twentieth century; in fact, a Supreme Court ruling once called it a “perk” of being an executive. However, after the excesses of the 1920’s (e.g the US stock market crash of 1929), the subsequent decade of depression, and the resulting shift in public opinion, it was banned.[ii]
In the 1980s insider trading achieved wide-spread notoriety (civil and criminal cases against Michael Milken and Ivan Boesky) and inspired even Hollywood's imagination with the movie "Wall Street".[iii]
The 21st century brought the return of that nostalgic relic of the '80s, the supposedly heinous crime of insider trading. The SEC reported a nearly 50 percent rise in insider-trading cases from 2000 to 2001 alone.[iv] Since April 2006, the SEC has filed insider-trading-related la ...