UPDATED: April 2022
4 Facts Investors Should Know About Insider Trading – There is always controversy around the topic of insider trading, even though it shouldn’t even be a problem for investors. That’s because the Securities and Exchange Commission (SEC) is always keeping an eye out for any illicit trades that are made in the stock market. They have been clamping down on regulations surrounding trades every year, and investors must learn about a thing or two about them, so they don’t end up making a fatal mistake.
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4 Facts Investors Should Know About Insider Trading
Investors should be aware of what types of trades are being scrutinized and where they have some leeway to make trades. That’s how they end up making trades that are profitable for them and don’t get them into trouble with the authorities. However, you can never be too careful, and that’s why we are sharing 4 facts investors should know about insider trading.
1. The SEC Is Always Watching
The SEC has always had a firm eye on insider trading, and there is more focus being shed on this activity now than ever before. Over the past couple of years, there has been intense scrutiny on broker-dealers and corporations because of all the rule changes introduced by the SEC. For instance, broker-dealers need to be careful about their deals and mergers, which can be manipulated through insider trading and cause harm to the investors.
2. Learn About “Disgorged” Profits
Company executives were never at liberty to sell the shares of their company, to buy and sell quickly before a financial revelation or major announcement. However, the SEC is now punishing those who do trade in this manner. So, if an insider is selling their company’s securities and profiting from it within a window of 6-months, the insider will need to pay taxes caused by the transaction, and the company will have the profit disgorged back to it. Insiders can also not pair up with outsiders for making trades.
3. Stop Trading on Disclosures
It’s possible that disclosure might have happened, but you didn’t get the time to act on that information. By the time that a stock goes up or down, the insider has already made their move. This shows regulators that there had been nonpublic knowledge present and different parties are now obligated to share that information with the public. That’s why it is no use to you or profit when trading on disclosures, so as an investor, it’s better not to trade on it.
4. Have Information About 8-K Forms
Under most circumstances, insiders are well within their rights to trade shares of their companies. However, what they can’t do is trade before the material information is publicly released. That’s why corporations should restrict trading before any announcements for earnings. The 8-K form by the SEC discloses big news publicly, like the sale of a division, merger or acquisition, or problems with earnings or the supply chain. Therefore, investors should acquire more information on 8-K forms before trading.
Conclusion to 4 facts investors should know about insider trading
About the Author & How YOU Can Profit: This article is the copyrighted product of the team at BuybackAnalytics.com .
Buyback Analytics is a Top Tier Investing Platform to help investors find, analyze, and profit from investing opportunities not found through traditional investment tools. We specialize in this simple concept: Follow the trades of Insiders – CONSISTENTLY PROFITABLE Traders, Investors, and Institutions because THEY get Inside Information that YOU don’t:
LEGAL Insider Trading / Inside Traders (CEOs, CFOs, Corporation’s Accountants & Attorneys, Politicians, etc.)
Stock Buybacks (Share Repurchases) by Public Corporations (ie. Apple, Tesla, Netflix, Meta (Facebook), Microsoft, etc.)
Market Moving Institutions (Examples: Market Makers, Investment Banks, Stock Brokerages, Hedge Funds, etc.)
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