Insider Trading and other Stock Market Skullduggery

The Obama Justice Department is Stepping up Insider Trading Investigations

The Obama Justice Department has stepped up insider trading investigations and enforcement. In particular it is focusing on so-called "expert network firms" that provide information to mutual funds and investment banks on developments in corporations that are likely to affect stock prices such as unannounced mergers and acquisitions, unexpectedly high or low earnings and the like.  Charges have been brought in a number of cases where insider information has been obtained unlawfully from employees of  corporations and passed on to hedge funds, mutual funds and other big investors.

Ordinary investors do not have access to this privileged information and, as a result, are at the "bottom of the food chain," the last to find out the good news or the bad news. For that reason they are well advised not to play this loser's game in the Wall Street casino and put their money in no load, low cost, tax efficient no load mutual funds of the type offered by Vanguard and a few others whose objective is to serve the interests of their investors.

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Jeff May profile image

Jeff May 5 years ago from St. Louis

Good advice, although the greedy, free-wheeling wall-streeters with mostly Republican government insiders put one heck of a huge chunck out of my mutual fund portfolio.


dallas93444 profile image

dallas93444 5 years ago from Bakersfield, CA

Our Senate and House is run by Democrats...

The Obama Administration efforts to curb insider trading has created a new industry. The new "Expert Networks" is a result of regulations designed to level the playing field for investors inadvertently helped pave the way for a new era of insider trading, one that regulators said could exceed the brazen activity of the 1980's.

The SEC rule, "Regulation Fair Disclosure," prohibits analysts and investors from eliciting market-moving information from investor-relations professionals and other senior executives at public companies.

This created a back-door method to help big investors find an economic edge: companies offering to match "experts," such as mid-level executives companies with investors.

Insider trading has been around for more than two centuries. As markets soared in the 1920's, such trading was rampant.

The expert network provides information for sale. The recent crack down has shaken Wall Street and is changing how investors do "research." The alleged activities is simply the latest in an age-old cat-and-mouse game between regulators and traders...


Ralph Deeds profile image

Ralph Deeds 5 years ago Author

Thanks for your comment. Have you read "Winning the Loser's Game" by Charles Ellis? It's a small book full of a lot of wisdom.


dallas93444 profile image

dallas93444 5 years ago from Bakersfield, CA

Yes, great read:

Through three previous editions of Winning the Loser's Game, Charles Ellis has shown investors how the markets really work and why most investors are their own worst enemies. Relying on simple data and historical facts, Ellis argues that the most successful investors avoid short-term traps to concentrate on long-term strategies that allow time, compounding, and the natural ebbs and flows of the markets to work their magic.


Jeff May profile image

Jeff May 5 years ago from St. Louis

The natural ebb and flow magic occasionally crashes into reality like our current Great Recession.


Ralph Deeds profile image

Ralph Deeds 5 years ago Author

A federal judge ruled Wednesday that federal prosecutors could use wiretapped telephone conversations as evidence against six defendants in the insider trading case involving the Galleon Group. The case has spawned a wide-ranging government investigation of suspected insider trading in the hedge fund industry.


Kaniel Loughran profile image

Kaniel Loughran 5 years ago

Thank you for introducing me to the word skulduggery. I am sure to use it in the future. Agreeably, long term investing is statistically more likely to turn a profit, but there is something to be said for swing trading as well. If day trading and scalping is problematic for most low capital traders and investing is too delayed of a ROI for those strapped for cash, then perhaps a happy medium is swing trading for a matter of days or a couple of weeks?


Ralph Deeds profile image

Ralph Deeds 5 years ago Author

For most people regular saving and investing in no-load, low-cost, tax-efficient, index mutual funds like those offerec by Vanguard is the best answer. Day trading, swing trading (new term for me) and market timing are risky for amateur investors. As Charles Ellis said they are a "loser's game."


Kaniel Loughran profile image

Kaniel Loughran 5 years ago

Agreed. One should leave day trading and swing trading alone until he or she has sufficient time, capital and most importantly, experience to handle the violent swings of such short term trading.


Ralph Deeds profile image

Ralph Deeds 4 years ago Author

9-25-11NYTimesMagazine "The Greed Police, All You Need to Know About Insider Trading"

In the Insider Trading War, Market-Beaters Beware - NYTimes.com

In the crackdown on insider trading, the ambiguity of the law is an asset — and anyone who consistently beats the market is a suspect.


Ralph Deeds profile image

Ralph Deeds 3 years ago Author

1-15-13NYTimes "How Pursuit of Billionaire Steven Cohen Hit One Dead End at SAC Capital

How Pursuit of Billionaire Hit One Dead End - NYTimes.com

The investigation of SAC Capital Advisors highlights the challenges of using lower-level workers to build a case against their boss.

http://dealbook.nytimes.com/2013/01/14/how-pursuit...

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