UPDATED: March 2022
Addressing the Challenge of Insider Risk – Even though cybercrime continues to rise, one of the most dangerous threats that companies face today is insider trading. No company wants to be caught red-handed in facilitating insiders to take advantage of nonpublic information to profit.
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Addressing the Challenge of Insider Risk
The penalties of insider trading are significant and deter most people from engaging in this illegal activity. Still, the greed for more money often causes insiders to take risks they would rather not take.
Therefore, it is up to the company to ensure that they keep an eye on their insiders and watch their trades to check if they aren’t making insider trades. That is hard to do in large organizations, and that is the reason so many companies are focusing all their efforts on addressing the challenge of insider risk. To compound matters, there are different types of insiders that the company should be aware of. These include the following:
* Malicious Insiders
These are insiders who don’t care about the company’s reputation or about the financial penalties they would be charged with if found guilty. Their motivation is to make money quickly, and they will go to great lengths to get any advantage they can.
* Negligent Insiders
These are insiders who aren’t trying to do something illegal, but their incompetence or failure to follow protocol end up engaging in insider trading. Most companies are wary of negligent insider trading because it can be challenging to prove that the insider didn’t know they were doing something illegal.
* Careless Insiders
These insiders have made a careless mistake that has resulted in insider trading and serious harm to the company. They aren’t motivated by making more money but ended up using the wrong information to make their trades.
Determining the Risk of Insider Trading
Almost every company is taking the threat of insider trading seriously because they can face serious penalties and loss of reputation in the industry. No one wants to be charged with insider trading, and therefore, they are coming down hard on individuals guilty of this activity. The best way of addressing the challenge of insider risk is to train and educate your employees about what constitutes illegal insider trading.
There is also legal insider trading, but there is a fine line that individuals must not cross at any point. As a corporation, you must implement a system that checks all trades and ensures that insiders are not trying to access nonpublic information to benefit and profit in the stock market. Once they are guilty of insider trading, it can be extremely difficult to prove their innocence, which is why it is best to avoid all instances of 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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