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Study asserts startling numbers of insider trading rogues
Key Excerpts from Article on Website of CNBC


CNBC, June 17, 2014
Posted: June 23rd, 2014
http://www.cnbc.com/id/101764568

There is often a tip. Before many big mergers and acquisitions, word leaks out to select investors who seek to covertly trade on the information. Stocks and options move in unusual ways that aren't immediately clear. Then news of the deals crosses the ticker, surprising everyone except for those already in the know. Sometimes the investor is found out and is prosecuted, sometimes not. That's what everyone suspects, though until now the evidence has been largely anecdotal. Now, a groundbreaking new study finally puts what we've instinctively thought into hard numbers and the truth is worse than we imagined. A quarter of all public company deals may involve some kind of insider trading, according to the study by two professors at the Stern School of Business at New York University and one professor from McGill University. The study, perhaps the most detailed and exhaustive of its kind, examined hundreds of transactions from 1996 through the end of 2012. The professors examined stock option movements when an investor buys an option to acquire a stock in the future at a set price as a way of determining whether unusual activity took place in the 30 days before a deal's announcement. The professors are so confident in their findings of pervasive insider trading that they determined statistically that the odds of the trading "arising out of chance" were "about three in a trillion." But, the professors conclude, the Securities and Exchange Commission litigated only "about 4.7 percent of the 1,859 ... deals included in our sample."

Note: For more on this, see concise summaries of deeply revealing financial corruption news articles from reliable major media sources.


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