In the world of capital markets, those who have good information and two are the other, are practically large. Not all information is readily available to all market participants and its misuse can significantly favor selected individuals over others. The use of such enriched information is called so insider trading. So this is it?
The term insider trading is associated with most trades, where information that is not publicly available is misused (information on the preparation of the phase, high fines, granting and withdrawing permits relevant to business companies, granting exclusivity, etc.). Such information is usually available only to the people in the company (so-called insidei – director, manaei, significant shareholders), or analysts of large financial institutions and banks. These are data that can decisively influence the movement of the share price on the capital market and investors can consider it an important factor when deciding on the purchase or sale of a security.
In addition to the directors and prominent managers of the company, who have insider information first hand, the infinite insider trading will attract people from the immediate vicinity of the insider, who buy and sell securities to stock the tip. In this way, it is often the case that a well-known representative of the company conducts trades through three people in order to avoid the suspicion of insider trading. In most developed markets, the rules apply, on the basis of which the company must report to each trade that shares sv spolenosti na svj et.
In our country, insider trading has been officially registered since the mid-1990s and is the first to be engaged in business on the capital market. According to the opinion of the Securities Commission (its competence is currently taken over by the Czech National Bank), the longest prevention against insider trading is the open information of entities concerned with sensitive information. On the other hand, other entities have an established duty of confidentiality regarding all inside information that may have a decisive effect on the share price. This applies to the example of some policies, due to their clumsiness, many codes were full.
The problem of insider trading is its sometimes problematic catching up with the perpetrator and going to three proofs. There are opinions that the basis of insider information should not be criminal at all, because it is a crime without sacrifice. But we do not have such arguments.
Abroad, especially in the USA, where the laws are practically the most perfect in this respect, and relatively until recently as the only one accepted and valid, inconsistent insider trading is relatively punishable. There are several known cases in the world from the last years, when more and more influential people, who used non-public information to get rich, were convicted or even convicted. One of Morgan Stanley’s largest investment banks, John Mack, who had a very close relationship with the Peguot Capital investment fund, was investigated for possible misuse of door information. He had an infinite insider business to drink a few million dollars.
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Another well-known figure in the financial world is Georgie Soros, who was convicted in France in a 1988 case of insider trading. Using door information, he was to gain control of Socit Gnrale. One of the richest women in the world, businesswoman Martha Stewartov, was even sentenced to five prisoners and in the same case was sentenced by ImClone, which advised its acquaintances to sell shares before, it did not reveal that the company would not launch its new lk Erbitux He received seven years in prison and a $ 4.3 million fine. One of the executive directors of EADS was accused of selling EADS shares just before, it did not indicate that the commissioning of the new Airbus A 380 aircraft would be delayed.
One of the most recent recent cases is the case of former Goldman Sachs analysts, who traded several million dollars for non-public information. In addition to the two of them, their relatives and acquaintances were interested in the case, and they gave them hot tips and they did not praise them for the profit. In the case, they were sentenced to several decades and heavy fines.
But there is no need to go far for the treasures. A few months ago, he calmly distributed the waters of the home capital market in case of insider trading with two representatives of the company EZ, Petr Voboil and Alan Svoboda. The charge bag was not confirmed.
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The insider trades themselves do not always have to be in conflict with the law, and even small investors can use the information about these legal trades for the benefit of the insiders. Legal insider trading, unlike the infinite one, is based on information that is publicly available. In addition, companies in the top positions of the company are obliged to report their dealings in the shares of their companies to their supervisory body and cannot obtain this information.
Many experienced traders first find out about buying and selling securities made by a company or people moving in a given industry when making decisions about their investments. According to official statistics, based on insider information only on the US stock markets, shares worth more than USD 18 million (around USD 400 million msn) are bought daily and sold for more than USD 450 million (msn is around USD 10 billion). .
Each investor should remember the basic rules in connection with insider trades (let’s talk about legal insider trading):
1, Insidei can sell their shares for various reasons, but buy them for only one thing: think that the price will rise.
2, Insidei know the industry in which they do business, and especially the company in which they are employed
3, Insider trading can only be paid when the prices of the event fluctuate. Thus, insiders trading shares on the inside information stock can move the stock in the right direction, so that the costs, develop a new product, etc. Therefore, if the insider issues a stock based on these facts, all owners will issue a share to his company.
4, No one invests to sell, not even insidei. Since they cannot trade stocks for a short time, it is not a share, buy shares when they are convinced that the shares will earn in the long run.
This means that if the shares are bought by the main company, it is usually a good signal to buy the shares, especially when several managers of the company decided to buy and the realized volumes are not significant. The key is who buys the tax. If these are the people from the highest positions who have the best information about the company, the signal to sell or buy stronger, not if the shares are bought by employees.
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In addition, it is a very good sign for investors if the insider buys sales, which is interpreted as an optimistic outlook for the future. On the contrary, if sales are much you, not buyers, it means that the stock markets are not exactly the best.