Effects of Insider Trading on Stocks

Making sense of insider trading as an investor

February 2022

Effects of Insider Trading on Stocks in 2022 – In this article we’re going to answer you questions about the Effects of Insider Trading on Stocks. When is insider trading legal? How can you profit from legal insider trading? What does the SEC, Security Exchange Commission tell us is necessary to comply with it’s rules on insider Trading? Well, here is the information you need to know.

No one can deny that insider trading in the stock market can be illegal, and there are severe penalties for perpetrators. If you are found guilty of trading in the stock market using insider information, you could end up behind bars and face the full force of the law. However, what most people don’t know is that The Securities and Exchange Commission (SEC) has a requirement where every insider needs to disclose their trades, and they must be reported in financial papers, then insider trading can be LEGAL.

NOTE: SEE the SEC (Securities and Exchange Commission) has to say about Insider Trading Rules here.

Investors can then use this information to find clues about various companies and decide which trades they want to make. The simple act of insider trading in the stock market is enough to land you in trouble because using information that isn’t accessible to the other party is a criminal act. There is a lot said about the impact insider trading has on the stock market.

NOTE: SEE what’s needed for trades to be LEGAL for Inside Traders and what notifications they must make from the SEC.

What are the Effects of Insider Trading on Stocks and the Stock Market?

It is said to derail confidence in the market and to hurt the stock market in general. However, the stock market can’t get hurt because it isn’t a physical entity. You can’t claim that the market has been a victim of insider trading because it won’t be true. You could say that insider trading affected the price of stocks in the market and hurt the traders who were engaged in the buying and selling of that stock.

The stock market witnesses various trades being made every day, and some of them are bound to be made based on insider information. Verifying trades that have relied on insider information can be difficult because you can’t know that information wasn’t public knowledge beforehand. The price of stocks is generated by supply and demand, so you can’t blame it on insider information.

How Do the Effects of Insider Trading on Stocks Hurt Investors and the Stock Market?

However, one thing that you can blame illegal insider trading is that it decreases the value of trades made in the stock market. If an investor uses insider information to make trades and profits from them, it will create an unfair advantage. The imbalance will result in the market favoring them over others, which can’t be allowed to stand.

Therefore, it makes sense that insider trading is regulated when trading on the stock market. No individual who has prior knowledge about a company can trade in their stock and gain an advantage over others. That will create a level playing field and ensure that stock market trades are free from any controversy. That is easier said than done, but in the general scheme of things, it is a necessary act that will help keep the playing field level for all traders.

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About the Author:  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 SUCCESSFUL, PROFITABLE Traders, Investors, and Institutions:

LEGAL Insider Trading (CEOs, CFOs, Corporation’s Accountants & Attorneys, Politicians, etc.)
Stock Buybacks / Share Repurchases by Public Corporations (ie. Apple, Tesla, Netflix, Facebook, Microsoft, etc.)
Market Moving Institutions (Examples: Market Makers, Investment Banks, Stock Brokerages, Hedge Funds, etc.)

Use of Our articles: You are welcome to benefit from lots of FREE articles that you can read and learn from on our website blog.  You are also welcome to share or post this information as helpful content to your website or blog audience as long as the article, and this entire byline are left intact, word for word.  If you would like us to provide you with more, or bulk content for your blog or website to educate your audience on basic to expert financial and investor information & techniques, feel free to contact us at info@buybackanalytics.com .

5 Ways to Prevent Insider Trading in Your Company

5 Ways to Prevent Insider Trading in Your Company

There are 5 ways to prevent insider trading in your company, that if followed, can save your company from damage to it’s reputation, lawsuits, and civil or criminal liability and penalties. Recently, there has been plenty of attention given to insider trading, and it has generated a lot of publicity for people who have been guilty of insider trading. No company wants its executives to be accused of insider trading and using non-public information to benefit and enrich themselves. However, the biggest risk that companies are facing today is not malicious intent, or greed, but corporate negligence. So, learn these tips to keep your business safe.

5 Ways to Prevent Insider Trading in Your Company

Most companies can easily prevent insider trading from occurring in the first place if they employ a stable system of checks and balances. These measures will prevent insider trading from happening, and the company won’t face allegations of criminal activity. Therefore, we will share the five best ways to prevent insider trading in your company. Here is what you need to do.

1. Practice Risk-Free Trading

One of the best ways to prevent insider trading in your company is to practice risk-free trading. You can place restrictions on insiders not to trade when the company’s quarterly earnings report is about to be released. It will reduce all instances of insider trading occurring and won’t see insiders placing risky trades. You can also create a list of stocks in which your employees can’t trade at all, which will ensure that your company has nothing to do with insider trading.

2. Keep an Eye on All Insider Trades

You should look at all trades being made by company insiders so that you can determine whether there has been a trade made using insider information. Observing these trades will allow you to manage all trades and keep a check on their employees. You can even employ a third party to check trades made by your corporate insiders to ensure they follow the rules and don’t make trades based on insider information.

3. Educate Your Employees on the 5 Ways to Prevent Insider Trading in Your Company

It is easy to commit insider trading when you are not aware of the threats and risks. You can diffuse the situation by educating your employees about insider trading and the penalties they stand to suffer. Implement a training program to teach employees how to avoid insider trades and what to do if they come across someone guilty of insider trading.

4. Investigate Insider Trading Quickly

Don’t waste time if you find someone guilty of insider trading. You need to take action yourself before an outside party threatens you with legal action. When you have your house in order and know about insider trading in your company, you can act fast to take action against the culprits. That will also send a strong message out to others that the company won’t tolerate insider trading.

5. Use Technology to Limit Insider Trading

You can also use technology to help limit insider trading in your company. There is plenty of software around to alert you if someone from your company is making insider trades. That will protect your company from insider trades and damaging lawsuits that arise from insider trading activity. Insider Trading Management Systems (ITMS) are designed to help companies notice insider trading and prevent it from occurring in the company.

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About the Author:  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 SUCCESSFUL, PROFITABLE Traders, Investors, and Institutions:

LEGAL Insider Trading (CEOs, CFOs, Corporation’s Accountants & Attorneys, Politicians, etc.)
Stock Buybacks / Share Repurchases by Public Corporations (ie. Apple, Tesla, Netflix, Facebook, Microsoft, etc.)
Market Moving Institutions (Examples: Market Makers, Investment Banks, Stock Brokerages, Hedge Funds, etc.)

Use of Our articles: You are welcome to benefit from lots of FREE articles that you can read and learn from on our website blog.  You are also welcome to share or post this information as helpful content to your website or blog audience as long as the article, and this entire byline are left intact, word for word.  If you would like us to provide you with more, or bulk content for your blog or website to educate your audience on basic to expert financial and investor information & techniques, feel free to contact us at info@buybackanalytics.com .

5 Types of Insider Threats in Financial Organizations

Financial Organizations and the insider threats they face

5 Types of Insider Threats in Financial Organizations – All organizations face the threat of cyber-attacks equally, but financial organizations are the ones that are most vulnerable to cybersecurity threats. The main concern for these organizations is the level of risk they face from insiders in the company. Both internal and external factors may cause security breaches, but insider threats prove to be the most damaging to financial organizations.

5 Types of Insider Threats in Financial Organizations

This article will cover the five types of insider threats that financial organizations may face, along with measures they can take to protect themselves from major security breaches and cyber-attacks. The main motivator for insiders is financial gain or a way to take revenge from the corporation. Whatever the reason, financial organizations must have measures to deal with insider threats and protect their clients and their reputation.

1. Careless Workers

These insiders don’t have malicious intent but tend to pose a risk to financial organizations through their actions. They may inexplicably share valuable information with their friends and family, which puts them in an advantageous position to trade in the market. These individuals may break security protocols without knowing or installing applications unapproved by the business. Their actions can put the entire organization at risk of insider trading or cyber-attacks.

2. Insider Agent

These individuals work for a third party and can be part-time or full-time employees. Their motivation is to acquire trade secrets or valuable software or technology from the organization and use that for their benefit. You can stop these insider agents by implementing a system to monitor all activity and restrict access to critical files for authorized personnel only.

3. Third-Party Services

When financial organizations work with third-party services, they risk exposing their valuable technology and information. An individual or a third-party service with the proper motivation can steal that information and use it for their gain. The best way to deal with this threat is to implement a proper system where everything is monitored and any suspicious activity is stopped in its tracks.

4. Disgruntled Employees

These insiders are the most dangerous individuals because they think they have nothing to lose. They may feel let down by the organization and want to exact revenge on the company by stealing valuable information or technology and sharing it with their competitors. They are motivated to work against the company’s best interests and may do serious harm to the financial organization.

5. Malicious Insiders

These insiders are in positions of power and want to use sensitive data and valuable information for their gain. They have access to all the company’s documents and financial reports and can use them to make trades for their benefit in the market. These individuals are the hardest to track for financial organizations since they are generally the company’s most senior officials.

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About the Author:  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 SUCCESSFUL, PROFITABLE Traders, Investors, and Institutions:

LEGAL Insider Trading (CEOs, CFOs, Corporation’s Accountants & Attorneys, Politicians, etc.)
Stock Buybacks / Share Repurchases by Public Corporations (ie. Apple, Tesla, Netflix, Facebook, Microsoft, etc.)
Market Moving Institutions (Examples: Market Makers, Investment Banks, Stock Brokerages, Hedge Funds, etc.)

Use of Our articles: You are welcome to benefit from lots of FREE articles that you can read and learn from on our website blog.  You are also welcome to share or post this information as helpful content to your website or blog audience as long as the article, and this entire byline are left intact, word for word.  If you would like us to provide you with more, or bulk content for your blog or website to educate your audience on basic to expert financial and investor information & techniques, feel free to contact us at info@buybackanalytics.com .

What Investors Can Learn from Insider Trading

Making the most of insider trading as an investor

UPDATED: March 2022

What Investors Can Learn from Insider Trading – When investors are studying the market, making sense of insider trading activity can be one of the hardest challenges they face. After all, they must look at the market dynamics and then figure out whether insiders are making moves based on the rise and fall of share prices.

What Investors Can Learn from Insider Trading

Even though corporate insiders may be engaging in insider trading, it doesn’t mean that insiders have it easy when trying to figure out what financial investments to make in the market.

To make things simpler, we will share what insider trading is, how can an investor learn from insider trading, and what is the best use of insider trading data. So, let’s begin: 

What Is Insider Trading?

The first thing you should know about is that there is illegal insider trading, and then, there is legal insider trading. As an investor, you must first understand the difference between the two to profit more from them. Illegal insider trading occurs when insiders buy and sell shares using nonpublic information. That means insiders are trying to gain an unfair advantage over other investors by using crucial financial information about their company.

Therefore, anyone who is trying to access nonpublic information to use it for their benefit when making trades in the financial market is complicit in illegal insider trading. Some examples of insider trading include the following:

  • The company CEO sells their stock after learning that the company suffered massive losses.
  • The top executives of the company also sell their stock after learning about the heavy financial losses the company suffered during the last quarter
  • Employees sell their shares after learning in the financial report meeting that the company will not post a profit this quarter.

Anyone found guilty of illegal insider trading could face heavy fines and even jail time. The Securities and Exchange Commission (SEC) regulates insider trading and keeps a close watch on anyone involved in insider trading on the financial market.

Insider Trading Isn’t Always Illegal

There are certain times when insider trading isn’t illegal, and this happens when the top executives and insiders in the company are involved in trades that aren’t based on insider information. Most of the time, insiders tend to make trades to raise personal capital. An employee of the company may sell all of their shares because they want to raise capital to purchase a new house or a boat. Also, some corporate executives are given compensation in stock by the company.

That is the reason why you may notice that a top executive of the company has suddenly bought a large number of shares in the company. That doesn’t mean the share prices will rise in the coming months but is generally the executive solidifying their compensation. There is a thin line between legal and illegal insider trading, which shouldn’t be crossed.

Investors looking to learn from insider trading should base their financial decisions on various factors instead of relying solely on insider information.

Conclusion to What Investors Can Learn from Insider Trading

Insider trading has been around for a long time, and you must look at all the factors when making investment decisions as an investor. Even though insider information is important to look at, major corporations have hundreds of insiders, and trying to figure out a pattern may prove to be a difficult proposition for investors.

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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.)

Use of Our Articles: You are welcome to benefit from lots of FREE articles that you can read and learn from on our website blog.  You are also welcome to share or post this information as helpful content to your website or blog audience as long as the article, and this entire byline are left intact, word for word.  If you would like us to provide you with more, or bulk content for your blog or website to educate your audience on basic to expert financial and investor information & techniques, feel free to contact us at info@buybackanalytics.com .

What Is Insider Tipping, and How Is It Related to Insider Trading?

Learn about insider tipping and why it is still illegal

UPDATED: March 2022

What Is Insider Tipping and How Is It Related to Insider Trading? – Most people know that insider trading is illegal, and they can get jail time if involved in the act. However, they don’t know that insider tipping is also a form of insider trading and can land you in trouble. Insider tipping occurs when you inform someone of a public company’s information that may move its stock price, motivating them to trade the company’s securities.

What Is Insider Tipping and How Is It Related to Insider Trading?

Such actions are considered illegal because the trader gets a tip-off that gives them an unfair advantage over other investors regarding the movement of the stock price, which will occur when the information becomes public knowledge. Insider tipping can occur on the internet, via e-mail, conventional mail, phone call, or in person. The tipping will be considered illegal if the following occurs:

  • The tipper gains an indirect or tangible benefit from the tip
  • The tipper passes the tip with the knowledge that it will profit the recipient
  • The person receiving the insider information knows that the tipper is breaching their fiduciary duty

You need to understand the role you can play as an insider tipper. Passing on information that directly or indirectly benefits the investor to whom you passed the information is illegal and will subject you to a penalty and jail time.

The SEC Takes Insider Tipper Liability Seriously

You can still be accused of insider tipping, even if you didn’t trade yourself and simply passed on the information to someone else. There have been cases where it is clear that federal prosecutors and the SEC take tipping very seriously, especially when it brings about actions of insider trading. You don’t want to be caught on the wrong side of the law when passing on trading information to someone with the knowledge that they will benefit.

Conclusion to What Is Insider Tipping and How Is It Related to Insider Trading?

Insider trading is already illegal, but when you pass on information that can result in insider trading activity, you are accused of partaking in the same activity. Therefore, you can be held liable and be sent to jail for aiding and abetting insider trading. There have been numerous high-profile cases where people involved in insider trading were caught and punished to the full extent of the law.

If you want to avoid insider tipping, make sure that you understand that you will be committing a crime by sharing any information that can benefit a trader if they take appropriate actions. Therefore, it is best to learn how to avoid insider tipping and stay on the right side of the line when it comes to trading activities.

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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.)

Use of Our Articles: You are welcome to benefit from lots of FREE articles that you can read and learn from on our website blog.  You are also welcome to share or post this information as helpful content to your website or blog audience as long as the article, and this entire byline are left intact, word for word.  If you would like us to provide you with more, or bulk content for your blog or website to educate your audience on basic to expert financial and investor information & techniques, feel free to contact us at info@buybackanalytics.com .

Insider Trading: How to Stay Out of Trouble

Understanding what is insider trading and how you can avoid getting into trouble

UPDATED: March 2022

Insider Trading: How to Stay Out of Trouble – Everyone knows that owning company stock carries financial risks. However, it comes as a surprise to many employees that trading company stock can actually get you into serious legal trouble, including criminal liability.

Insider Trading: How to Stay Out of Trouble

Two major ways in which you can, even accidentally, break the securities laws are called insider trading and insider tipping. This article will explain what you need to know to stay out of trouble when you trade any company’s stock.

The Basics of Insider Trading and Tipping

There’s no doubt in anyone’s mind that insider trading is illegal. It occurs when someone trades stock or other securities on the basis of what is termed material nonpublic information (MNPI). MNPI is confidential, proprietary information about a company that will affect its stock price either positively or negatively when the information is made public.

Insider tipping is also illegal. It means sharing MNPI with others. The laws against insider trading and tipping apply to everybody. They don’t apply only to company insiders or executives, though their positions tend to put them at more risk than ordinary employees.

Insider trading and tipping are considered violations of securities law because they give certain people an unfair investment advantage over other investors and therefore undermine the fair operation of the capital markets. If the capital markets were to lose public trust and confidence, the investment would fall, to the detriment of companies and the economy.

What Constitutes Insider Trading?

The insider trading laws apply to MNPI not only about a company you work for but also about any company you may know through a professional or personal relationship, e.g., through a family member who works for that company or through your company’s vendor, supplier, or client. The SEC now wields a formidable array of digital technology to spot, track, and examine links between people involved or connected with suspicious stock trading activities.

The SEC uses sophisticated data analytics, including pattern recognition, to detect suspicious stock trading. The SEC’s ATLAS tool lets the agency’s staff harness multiple streams of data, including blue sheets, pricing, and public announcements. The tool is routinely used to look for insider trading before a major equity event, detect serial insider trading, and research historical securities prices for litigation.

What is Insider Tipping?

Insider tipping is illegal and closely related to insider trading. It means sharing MNPI (Material Non-Public Information) about a public company that may motivate the recipient to trade that company’s securities (e.g., shares or call options). This is illegal because the tipped-off trader gains an unfair advantage over other investors from the movement of the stock price that will occur when the information is made public.

Insider tipping can occur in person, by phone, via the mail, by email, or on the internet. The tipping is illegal if:

  • The person who receives the inside information knows or has a reason to believe that the tipper is breaching a fiduciary duty.
  • The tipper gets some tangible or indirect benefit from the tipping.
  • The tipper passes on the tip with the expectation that the recipient will try to profit from it.

When you tip someone, e.g., a friend or a relative, who then trades securities according to the inside information, you may be held accountable for up to three times the profit gained or loss avoided, plus disgorgement of the trading plans if your tipper can’t pay.

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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.)

Use of Our Articles: You are welcome to benefit from lots of FREE articles that you can read and learn from on our website blog.  You are also welcome to share or post this information as helpful content to your website or blog audience as long as the article, and this entire byline are left intact, word for word.  If you would like us to provide you with more, or bulk content for your blog or website to educate your audience on basic to expert financial and investor information & techniques, feel free to contact us at info@buybackanalytics.com .

Advantages and Disadvantages of Insider Trading

Figuring out the pros and cons of insider trading and how it can benefit you

UPDATED: April 2022

Advantages and Disadvantages of Insider Trading – A debate rages on in the financial community among professionals and academics about whether insider trading is good or bad for markets.

Advantages and Disadvantages of Insider Trading

Insider trading refers to the purchase or sale of securities by someone with information that is material and not public in the realm. Insider trading is not limited to company management, directors, and employees. Outside investors, brokers, and fund managers can also violate insider trading laws if they access non-public information.

Advantages of Insider Trading

The advantages of insider trading, defined as buying and selling stocks based on information originating within the relevant organization or business that is not publicly available, are clear. Those engaged in insider trading are partaking in a low-risk, high-reward practice that can reap considerable financial rewards. Insider trading is commonly assumed to be entirely illegal, but there’s a legal means of trading in stocks with inside information.

Employees and corporate officers are legally entitled to trade in the stocks of their own company. As long as those transactions are properly reported to the U.S. Securities and Exchange Commission (SEC), the transactions are perfectly legal and highly profitable.

Insider Trading Is Illegal?

Insider trading is illegal and has landed many investors in legal trouble, including spending years in prison, when it involves individuals outside of the corporation in question who buy or sell stock in that corporation based on information provided from individuals inside the corporation, who are privy to sensitive, proprietary information not accessible to the general public.

Illegal insider trading includes buying and selling stocks, the change in value that can be inferred logically from information an individual possesses about a particular corporation based on their association with that corporation. An example could include employees or officers of financial services companies doing business with the corporation whose stock they are trading.

Disadvantages of Insider Trading

In the case of illegal insider trading, the disadvantages are clear: prosecution by the U.S. Department of Justice and civil suits filed on behalf of shareholders by private and government agencies. Violations of laws restricting insider trading carry significant financial penalties and can, as noted, involve prison sentences. Among prominent individuals convicted of insider trading are:

  • R. Foster Winans, a former reporter for the Wall Street Journal. He was convicted of providing information attained in the performance of his duties as a reporter for the financial benefit of friends.
  • Ivan Boesky, one of the faces of the massive insider trading scandal of the late 1980s. He was fined $100 million and sentenced to three and a half years in prison.
  • Television personality Martha Stewart. She was fined and sentenced to ten months in prison.
  • Jeffery Skilling, Enron’s former CEO. He brought the company to the center of an enormous accounting scandal that resulted in him being fined $45 million and sentenced to two years in prison.

Conclusion to Advantages and Disadvantages of Insider Trading

When considering the Advantages and Disadvantages of Insider Trading, the major factors are: The advantages of insider trading, the reason it is commonly practiced, is the potentially enormous financial gains it can provide. The disadvantage is, when conducted illegally, it can lead to public exposure, heavy financial penalties, and a prison sentence.

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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.)

Use of Our Articles: You are welcome to benefit from lots of FREE articles that you can read and learn from on our website blog.  You are also welcome to share or post this information as helpful content to your website or blog audience as long as the article, and this entire byline are left intact, word for word.  If you would like us to provide you with more, or bulk content for your blog or website to educate your audience on basic to expert financial and investor information & techniques, feel free to contact us at info@buybackanalytics.com .

4 Facts Investors Should Know About Insider Trading

Insider trading facts that all investors should know about

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.

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

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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.)

Use of Our Articles: You are welcome to benefit from lots of FREE articles that you can read and learn from on our website blog.  You are also welcome to share or post this information as helpful content to your website or blog audience as long as the article, and this entire byline are left intact, word for word.  If you would like us to provide you with more, or bulk content for your blog or website to educate your audience on basic to expert financial and investor information & techniques, feel free to contact us at info@buybackanalytics.com .

4 Myths About Insider Trading

Insider trading myths that you should know about

UPDATED: April 2022

4 Myths About Insider Trading – Insider trading is constantly under the scanner whenever there are major trades taking place in the stock market. For the most part, the Securities and Exchange Commission (SEC) is the organization that looks at all lawful and unlawful trades. There is a lot of misinformation around insider trading, its impact on the stock market, and what constitutes insider trading.

4 Myths About Insider Trading

To counter all that misinformation, we will be looking at some of the myths surrounding insider trading so that you get the complete picture. It’s better to be informed about insider trading so that you don’t second guess yourself or think that you’re going to get into trouble whenever you’re trading. So, here are the most common 4 myths about insider trading:

1. Insider trading is bad for the stock traders who are buying or selling to the insider

The statement that insider trading is bad in all cases is false because the stock traders aren’t going to be affected by insiders trading in the stock market. That’s because they are already trading in the market and would lose or make around the same amount, irrespective of the other party’s identity. So, insider trading isn’t going to be bad for the stock traders who will be buying or selling to insiders in the stock market.

2. If insider trading was legalized, it would reduce capital investment, trading, and liquidity as the stock market would lose its integrity

This statement is again untrue, and there are a lot of studies that contradict this strongly. The stock market isn’t going to be compromised, and stock traders will not lose confidence in the market. You can look at the period before the 1960s to gauge how strong the stock market of the United States was before there had been any serious enforcement. There is nothing to support this statement, and it means that legalizing insider trading isn’t going to have as drastic an effect on the stock market as predicted.

3. It is feasible to enforce sensible insider trading laws

Another misconception surrounding insider trading is that the SEC can help introduce sensible laws that govern insider trading. However, due to SEC’s campaigns against insider trading, it can easily be determined that enforcement will be difficult and next to impossible. Apart from that, the fact that you can’t get inside the mind of an insider and learn when they plan to buy and sell in the market ensures that policing insider trading will be impossible from all angles.

4. Illicit trading is uncovered with the high-detection methods of the SEC

This is another false myth, one that the SEC has been making for a very long time. It’s still as untrue as it was over 50 years ago. The SEC’s methods for most of its policing are wiretapping and using informants to capture people involved in illicit trading activities in the stock market.

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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.)

Use of Our Articles: You are welcome to benefit from lots of FREE articles that you can read and learn from on our website blog.  You are also welcome to share or post this information as helpful content to your website or blog audience as long as the article, and this entire byline are left intact, word for word.  If you would like us to provide you with more, or bulk content for your blog or website to educate your audience on basic to expert financial and investor information & techniques, feel free to contact us at info@buybackanalytics.com .

The Basics of Illegal Insider Trading

Understanding what is insider trading and its consequences

UPDATED: May 2022

The Basics of Illegal Insider Trading – Illegal Insider trading is the purchase or sale of stocks or other securities based on information not available to the general public. It involves a direct breach of fiduciary duty or other violation of trust in which the trader uses insider knowledge to benefit financially.

The Basics of Illegal Insider Trading

Despite many high-profile incidents involving insider trading, many investors are still unsure about what it is, how it works, and why it’s such a big deal. Essentially, insider trading violates key rules and regulations designed to keep the market fair for all investors.

Detailed rules regarding insider trading are complicated and generally vary from country to country. The definition of an “insider” can be significantly different under different jurisdictions. Some may follow a narrow definition and only consider people within the company with direct access to the information as an “insider.” On the other hand, many also consider people related to the company officials as “insiders.”

What Is Insider Trading?

Insider trading happens when someone makes an investment trade based on “material” information not publicly available. In market terms, material information is any detail that could affect a company’s stock price. This information gives the individual an edge that few others have in the market. The trader must typically be someone who has a fiduciary duty to another person, institution, corporation, partnership, firm, or entity.

You can get into trouble if you make an investment decision based upon information related to that fiduciary duty if that information isn’t available to everyone else.

How Insider Information Works?

Insider trading can also arise when no fiduciary duty is present, but another crime has been committed, such as corporate espionage. For example, an organized crime ring that infiltrated certain financial or legal institutions to systematically gain access to and exploit and use private information might be found guilty of such trading, among other charges for the related crimes.

Insider information allows a person to profit in some cases and to avoid loss in others. In either case, it’s an abuse of someone’s knowledge or position of power. It’s illegal because it gives an unfair advantage to people who are “in the know.” Those who have been prosecuted for insider trading include corporate officers, employees, government officials, and those who have tipped them off with insider information.

However, not all insider trading is illegal. Many factors must be considered before the Securities and Exchange Commission (SEC) will prosecute someone for insider trading. The main issues the SEC must generally prove are that the defendant had a fiduciary duty to the company and/or they intended to personally gain from buying or selling shares based upon insider information.

What Are the Penalties for Insider Trading?

Insider trading penalties generally consist of a monetary penalty and jail time, depending on the severity of the case. The SEC has moved to ban trading violators from serving as executives at publicly traded companies.

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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.)

Use of Our Articles: You are welcome to benefit from lots of FREE articles that you can read and learn from on our website blog.  You are also welcome to share or post this information as helpful content to your website or blog audience as long as the article, and this entire byline are left intact, word for word.  If you would like us to provide you with more, or bulk content for your blog or website to educate your audience on basic to expert financial and investor information & techniques, feel free to contact us at info@buybackanalytics.com .