Hmm I wonder if Martha Stewart had bought any stock. 
http://www.phonearena.com/news/SEC-...ply-chain-reports-for-insider-trading_id38697
http://www.phonearena.com/news/SEC-...ply-chain-reports-for-insider-trading_id38697
SEC investigating Apple and other analysts supply chain reports for insider trading
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I just bought another 7 shares this morning as the price fell more. Thanks for the link. Apple earnings report on the 23rd.
Sorry but it should exist. Stock trading is all about information and individuals with non-public info can profit greatly and in the process harm the people they are trading with.
Not true. Like drug laws, insider trading laws created to protect actually do more harm than good.
Simply put the laws prevent most people from getting important information as it is against the law for those that know to share with those that don't know. The laws don't prevent insiders from knowing; they still know just as much.
A simple explanation as to why these laws do more harm than good.
http://articles.marketwatch.com/201...402_1_insider-trading-raj-rajaratnam-shares/2
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Letting these guys have their way with insider trading is like letting the fox in the hen house. On the other hand, Wall Street is full of crooks, so maybe the SEC should let them eat each other. Stocks would be more volatile then they already are if insiders were allowed to freely influence trends. The SEC only catches a fraction of the insider trading. I know for a fact that it is still being practiced.
That is true. Studies have shown that there is a positive correlation between market volatility and the amount of insider trading. But is that necessarily a bad thing? There is no correlation between volatility being good or bad. There are cost and benefits to both high and low volatility. Higher volatility for one means recessions tend to not last as long. It also gives greater insight to stability of particular stocks. There value is not falsely held constant by law, instead it is done more so by the market.
The thing is, these laws only help insiders profit more and while increasing the likelihood of hurting others. Just like the black market drug trade which can only exist because drugs are illegal. The laws against drugs only help cartels, gangs, and dealers grow stronger and become more profitable. In return it hurts those outside this illegal market even more (gang violence, financial, crime, addiction)
Insider trading goes on all of the time. Because laws against it exist, it limits those who know to fewer people. If most of the market is out of the know, it creates a false price for the value of the stock. Wouldn't you want insight before purchasing or buying?
"You want more insider trading, not less. You want to give the people most likely to have knowledge about deficiencies of the company an incentive to make the public aware of that." - Milton Friedmon
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The main point against ( per that article) insider trading is that the SEC spends too much time and money on sting operations. While I agree that sting operations are questionable in terms of legality, putting law enforcement often on the side of authorized law breakers. But this is no reason to permit insider trading. Insider trading would destroy the very open market that permits the public to trade fairly, on the same level field.
Insider trading would create two markets for the same stock, a public traded market and a private one. The private one is not really a market but rather just a system that reduces or increases supply of stock, and if law of supply and demand is real, then the demand on the public market would naturally increase driving up prices for the public, or lower prices ahead of the market depending on which way the insiders trade. It's the timing that is an unfair practice. Generally speaking, the insider market would happen before the public could trade.
Permitting a private market could only be done in an environment where there were time restrictions to purchase or sell the stock. Here the insider private buyers and sellers would only be allowed to buy and sell on particular days of the month. But then what's the point? The only way to permit insider trading is to not trade the stock at all but just issue it to the insiders in an option system. But, hey, we already have ESOPS. Here the stock is set aside ahead of time for the insiders. And these shares have a lockout period preventing the owner from trading.
If the SEC wanted to make the market more fair, they should reinstate the Uptick rule. Another topic.
BTW- insider trading is not illegal. It is just that the insiders must declare their buys and sells. It's when they do it in secret that makes it illegal. Also, if a public trader acquires insider information that is considered confidential such as the CEO has been diagnosed with a terminal illness and then shorts the stock ahead of the public learning of it, that is illegal too. Once the information is made public then anyone can legally trade the stock. Say I was a physician doing a routine physical on a CEO and learned of an illness and before this information became public I called my broker and shorted the stock. I could gain an unfair advantage but Skiking would have this practice legal. Or, lets say I was a clerk in a law office and learned from a judge that he was going to decide in favor of a company in a big suit. I could go out and buy that stock ahead of the public and when the news broke, the stock jumped in value. Remember the TIVO suits? That stock jumped from $10 a share to $17 in a couple days when that news broke. But in another decision the stock went down by $2 a share. Consider the advantage of knowing these things before the market does. Would you play poker with a person who knew what cards were in your hand but you didn't know what was in his hand?
Legalize insider trading... Are you kidding me?
Insider trading would create two markets for the same stock, a public traded market and a private one. The private one is not really a market but rather just a system that reduces or increases supply of stock, and if law of supply and demand is real, then the demand on the public market would naturally increase driving up prices for the public, or lower prices ahead of the market depending on which way the insiders trade. It's the timing that is an unfair practice. Generally speaking, the insider market would happen before the public could trade.
Permitting a private market could only be done in an environment where there were time restrictions to purchase or sell the stock. Here the insider private buyers and sellers would only be allowed to buy and sell on particular days of the month. But then what's the point? The only way to permit insider trading is to not trade the stock at all but just issue it to the insiders in an option system. But, hey, we already have ESOPS. Here the stock is set aside ahead of time for the insiders. And these shares have a lockout period preventing the owner from trading.
If the SEC wanted to make the market more fair, they should reinstate the Uptick rule. Another topic.
BTW- insider trading is not illegal. It is just that the insiders must declare their buys and sells. It's when they do it in secret that makes it illegal. Also, if a public trader acquires insider information that is considered confidential such as the CEO has been diagnosed with a terminal illness and then shorts the stock ahead of the public learning of it, that is illegal too. Once the information is made public then anyone can legally trade the stock. Say I was a physician doing a routine physical on a CEO and learned of an illness and before this information became public I called my broker and shorted the stock. I could gain an unfair advantage but Skiking would have this practice legal. Or, lets say I was a clerk in a law office and learned from a judge that he was going to decide in favor of a company in a big suit. I could go out and buy that stock ahead of the public and when the news broke, the stock jumped in value. Remember the TIVO suits? That stock jumped from $10 a share to $17 in a couple days when that news broke. But in another decision the stock went down by $2 a share. Consider the advantage of knowing these things before the market does. Would you play poker with a person who knew what cards were in your hand but you didn't know what was in his hand?
Legalize insider trading... Are you kidding me?
What we have seen of late is the Government's increased involvement in market volatility. I don't feel this is all the government's fault but the fact that so many traders today are knee-jerkers on any news anywhere and operate on a panic button. For a level headed trader this can be good as it creates movement in stock prices and for a trader who can hold when down until there is a pop in the price some nice money can be made. It is like gambling where the game is how long can you hold.
Investors are a different breed and here volatility is a not so good. Investors, hope to build a worth over time as the stocks they own grow in value.
Stating that laws create the problem is rather silly. If we get rid of "illegal" drugs by removing all drug laws, the problems of drug use would not go away. Eliminating speed limits on the roads would not make the hazardous results of speeding go away.
Free market capitalism is good and beneficial to all. If we eliminate the free market in this and permit private market capitalism, then we create a bad form, private insider capitalism or fascism.
Investors are a different breed and here volatility is a not so good. Investors, hope to build a worth over time as the stocks they own grow in value.
Stating that laws create the problem is rather silly. If we get rid of "illegal" drugs by removing all drug laws, the problems of drug use would not go away. Eliminating speed limits on the roads would not make the hazardous results of speeding go away.
Free market capitalism is good and beneficial to all. If we eliminate the free market in this and permit private market capitalism, then we create a bad form, private insider capitalism or fascism.
No kidding at all. Many leading economist will agree.
Remember it is legal in many countries and it was legal here through the '60s.
Like most regulations it was supported and proposed by large companies as a means to protect their own interest and reduce the amount of competition.
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No doubt, white collar crime is not generally committed by economic flunkouts. Simply put, if the market becomes a haven of secret deals and insider rigging of the stock prices I will go find the next game. Hint- There aren't many left.
The only people who want this are those who have a way to rig the market in their favor. Why do you think Congress and staff members are upset that their so called immunity from insider trading is being called in question? All I have to question yet is why do you favor this? You must have a pathway to easy money through insider trading. I don't. I have to buy and sell using public information like every one else in the Free Market.
Roland- That is my understanding. There has been for the past 2-3 years a popular practice where analysts and press have ( IMO ) conspired to rig some major stocks in a shorting scheme. Apple is just one of them and the major one. On a daily basis I see mostly negative stories break on the internet by unknown bloggers. Like the latest one that claimed Apple has cut its supplies due to poor iphone 5 sales. Then the stock tumbles by $45 a share over the next 2-3 days. This is a Bear short made in heaven. Most knowledgeable Apple stock holders know the normal times when the market shifts and how to time the buys and sells. These stories come as a surprise and then go away. I don't think these stories violate any insider trading laws but they do affect the market in a big way, those publishing them know it and the SEC should be investigating to see if the stories are fact based or nothing more than a scheme to manipulate the market using fraud.
We are not going to agree, which is fine. I don't care so much about agreement but understanding and clarity. I posted articles and a video in previous posts explaining why I think it should be legal. You do not have to agree with them.
Because I do care more about clarity and understanding I do have to question this last statement you made. You are somehow equating laws against insider trading as promoting more of a free market system and stating if we make insider trading legal, that somehow reduces the influence of the market. Correct me if I am wrong. This is the first time in my entire life I have ever heard anyone make an argument that more laws = more freedom, liberty, or capitalism.
If what I interpret you as saying is correct, then the opposite of what you are stating is actually true. Fascism cannot exist without government enforcing rules and regulations promoted by the private corporations. More laws and regulations correlates more strongly towards fascism. It is the very laws and regulations that further eliminates the free market. Making insider trading legal moves us further away from fascism not closer towards it
This is the issue. Secret deals are made even more secretly because of these laws.
That's an extrapolation of the theoretical that I did not make. The only restriction these insider trading laws make is on those who violate them and would have the free market become a rigged private market that unfairly controls the market for the public.
If there is a generality that total lack of laws = total freedom to do anything we want and that is good, then we really do disagree. I believe there are laws that prevent unfair advantage when a system of free markets are the goal. The purpose here is that when PUBLIC companies are traded in a free market, laws or regulations must be setup in order to keep the market free. Now, if you are referring to a NON Public company aka a private business that has limited private partnerships then yes, insider deals are permitted and quite appropriate because these are not public companies.
If we were to play a game of chess would you accept that I could play where I can move my chess pieces anyway I want but you were not permitted to know those moves before I made them? But you would have to stick to the rules of traditional chess until I made my creative move first? You would not think that was fair because when I invited you to play chess, you assumed the general rules of the game of chess. When I enter the stock market to trade, I have a fair education and understanding of the rules. I expect all players in the market to abide by those rules. Insider trading is not a path to free market. It is only a path to a rigged market. Anarchy is not a path to a civil society. Pure Capitalism is not anarchy. It is a system of rules where the game is a path to wealth based on public ownership of companies. Without those rules of free market capitalism, we just have anarchy. Anarchy is not freedom, it is survival of the fittest. You should not confuse anarchy with freedom.
If that is what it takes to violate the laws and allow the ruthless and corrupt to gain advantage then yes, laws make crooks wear masks when committing a robbery, metaphorically speaking. Laws force criminals to hide their bad acts. But eliminating laws does not make a market free and fare for all, it just decriminalizes the crooks so they can get away with using their position to rig a free market. If you legalize murder, people would do it openly and even brag on being a murderer. No police would come to arrest the murderer since there would be no laws broken. Does that make murder an accepted practice among a civil society? Likewise, if insider trading were to become an accepted practice by making it legal, then the public would not participate in the rigged market. The market would collapse and public companies would cease to exist. The end result in a capitalistic society is that all wealth would simply evaporate.
Look, I'm not a big time day trader. But since retirement 3 years ago, I have worked the markets every day, plus taken courses in economics and technical analysis. I study the rules of the market so I can "play the game" I find many people have a complete misconception of the stock, commodity, and currency and bond markets and how they affect our lives. Even the lives of people who believe what happens on Wall Street doesn't affect them. While not all the rules of the SEC are good rules and there should be more rules in other areas, there are some rules that if were not present, the entire market system would collapse. I believe refinement of the insider trading rule to apply to certain classes of people is a good thing. Congressmen who have access to lobbyists and laws that affect commerce and the economy need to be restricted in trading. If a congressman is set to know that a vote to approve a highway bill or a bridge built, he should be required to make it known if he plans to invest in a company or buy land cheap from a farmer, knowing the value will rocket as a result of his public position in government. Its called disclosure and it applies to me and you, but not congressmen or their staff. This I believe is wrong. But if those rules were eliminated and insiders everywhere could do this, then the market would cease to be a free market.
Laws won't eliminate secret deals. They just keep the deals like these a criminal act. Then the crook must weigh the risk with the rewards. I'm sure Bernie Madoff and others felt their secrets were safe.
FWIW- I don't trade my wife's employer's stock, ever. It keeps me from possibly executing on something she might have told me is going on. I do well enough without the grief.
PS- yes, I do disagree with the blogger. There is always two sides to these issues. I happen to favor rules and regulations that keep the markets free and public.
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