Examples of insider trading

[tarnor]

You have to be careful that the price movement before the big announcement is not just speculators moving in or out just before an announcement is due. More often than not the announcement is well and truely expected to occur around a certain date as companies keep everyone informed. eg quarterly and annual statements all include current work in progress and anticipated dates when results are expected.

totally agree with some high profile oil drills seems that people are waiting for something to leak right on pay dirt... the price moves a bit a certain way then speculators either bail or jump on causing it to run quickly. I remember one that did this only to release that thier results would be delayed a day or two more because of a well malfuntion - but judging form the movement you would have been certain that good news was getting out. With these expected price sensitive ann its virtually impossible to establish whether thier was any inside trading or not.

Unexpected ann out of the blue with big volume and price spikes are always suspect tho

 

[brerwallabi]

What really peeves me off is that companies keep certain investors and brokers in the know in how they are travalling and the likes of you and me don't have an idea till we read it, the announcment is usually many days after the time that major players in a company have been briefed on profit (or lack of) or strategy that could add value. I know one right now that is just about almost to go down the gurgler but I can't say a thing, I don't hold but some poor people do. Insider trading is alive and well.

 

[doctorj]

I'll only speak of Perth, because its what I know. It's common place for people within the industry to know whats happening a few days ahead of the market. It's well beyond the old 'buy the rumour, sell the fact', it's buy the fact, sell when the market finds out.

 

[wayneL]

I'll only speak of Perth, because its what I know. It's common place for people within the industry to know whats happening a few days ahead of the market. It's well beyond the old 'buy the rumour, sell the fact', it's buy the fact, sell when the market finds out.

hehe, Indeed.

The Doctor is dead right here.

 

[Dan_]

Would this class as a potentional case for NLX insider trading? Quite a large jump in volume & price, although I can't seem to find any news or announcements.

Thoughts appreciated

 

[tarnor]

Anyone care to post a chart for IMU for the last little while? Pretty much a classic example. Built up in sp for the last week or so with increased volume.

An announcement today saying they've signed with merial.. then the usual sell on fact...

They did get a speeding ticket a week ago though that said nothing had changed as of our last report - which was that negotiations for sub licensing were in the latter stages... So obviously some knew just how close this was...

 

[doctorj]

SHN looks fundamentally quite sick, but its getting accumulated very strongly whenever it gets to 3c.

Pump and dump play on the cards here.

 

[Smurf1976]

Would this class as a potentional case for NLX insider trading? Quite a large jump in volume & price, although I can't seem to find any news or announcements.

Thoughts appreciated

There was an analyst somewhere ramping NLX pretty hard a couple of weeks ago. Wish I'd taken their advice and bought. No doubt the price increase looks pretty good for them now but it makes me wonder what they knew that the market didn't.

 

[michael_selway]

Re: Examples of insider trading.

When ain increase in share price is queried by the ASX, thats a speeding ticket.

haha thaanks, thats something new to me

 

[markrmau]

VGL. Currently circa 90c.

Announcement today basically confirmed the market was partially informed.

 

[Kauri]

VGL. Currently circa 90c.

Announcement today basically confirmed the market was partially informed.

Unbelievable how they get away with it.. will be interesting to see if there are any changes in sub. holdings or director notices turn up in the next few days.

 

[Atomic_Sheep]

I'll only speak of Perth, because its what I know. It's common place for people within the industry to know whats happening a few days ahead of the market. It's well beyond the old 'buy the rumour, sell the fact', it's buy the fact, sell when the market finds out.

Well people within the industry need to know exactly whats going on to make the correct decisions and judgements in their jobs. It's wether they profit from this knowledge (insider trading) is the question. The fact that they will continue to have access to far superior information is beyond doubt and we can't do anything about that.

 

[Kauri]

Exchange clamps down

MICHAEL WEIR

The Australian Stock Exchange will set up a specialist intelligence unit as part of a crackdown on insider trading, market manipulation and poor disclosure after more than 100 suspected breaches last financial year.

The increased surveillance is expected to cost $10.4 million over the next three years, with listed companies picking up part of the cost through higher annual listing fees.

The ASX said it hoped the move, which follows a wide-ranging internal review of its role as market supervisor, would result in a higher strike rate from the cases passed for prosecution on to the Australian Securities & Investments Commission.

And in a move to counter continued claims of conflicts of interest, the exchange will set up a separate subsidiary company to handle its supervisory role.

With trading and company activity booming on the back of the record sharemarket, the ASX has come under pressure because of a perceived lack of action on potential insider trading and disclosure.

Brokers and market observers regularly highlight seemingly blatant cases of insider trading, especially among some junior companies, but little action appears to be taken.

The ASX said yesterday it had notified ASIC of 107 suspected insider trading or continuous disclosure breaches last financial year.

But the strike rate on insider trading has been relatively low with just three high-profile prosecutions - Steve Vizard, the late stockbroker Rene Rivkin, and Macquarie banker Simon Hannes - out of 68 potential cases referred to ASIC in the past three years.

And while wine group Evans & Tate and Andrew Forrest's iron ore company Fortescue Metals Group have come under scrutiny for market disclosure in the past year, animal drug maker Chemeq is one of only a handful now fighting formal action by ASIC.

The ASX said it had issued 2370 queries in 2004-05 over listed companies' compliance with continuous disclosure rules, up 53 per cent on the previous year. It also detected 83,917 "potentially inappropriate trading incidents" with 324 of those investigated further.

The specialist insider trading unit will form part of the ASX's existing surveillance team and come into effect on March 1 under the new supervisory subsidiary. The chief supervision officer will not report to ASX chief Tony D'Aloisio but to the board of the subsidiary company, which will include external directors.

The ASX said additional technology and training resources would be provided to further improve supervision of listed companies.

ASIC chairman Jeffrey Lucy said the new structure would create a clearer distinction between the ASX's supervisory and commercial roles. "The changes announced by the ASX today mean that supervision will be more fully accountable to the ASX board," he said.

In other moves yesterday, the ASX said it would change the way it charged brokers to trade and in a bonus for WA companies listing fees would be changed, cutting charges for small to medium-sized capital raisings but increasing them for bigger capital raisings.

ASX said it would change its fee structure to a value-based model replacing the current system of charging on a per-trade basis, in an effort to capture more of the daily $20 billion to $60 billion in global trading by hedge funds and sophisticated investors.

"If we get a small percentage of that it will significantly contribute to our $2.5 billion to $3 billion trading value on a daily basis," ASX group executive markets and deputy chief executive Colin Scully said.

Corporate governance expert Ian Ramsay hailed the new surveillance regime as a groundbreaking step for the ASX, which was the front line against corporate crooks.

But big brokerage houses may be stung by the changes. A representative of one investment bank characterised the reforms as yet another regulatory move in a highly regulated industry.

"It's not a positive thing for our business," he said. "At a time when there is increasing costs around compliance, to move to a system which is going to see an increase in costs for the business is not great from our perspective."

 

[sam21poddy]

Many years ago when I was young and naive, I worked for a big legal firm who acted for a company that was about to make an announcement about an invention that would revolutionise a certain manufacturing process. Anyway, there was a lot of excitement and people were running around whispering about what partners were buying the shares but I didn't understand what it all meant. Anyway, some days later one kind secretary explained to me how she had made $10,000 overnight and why it had happened. This was many many years ago and in those days you could have bought a house with $10,000. So this was my first hand experience of insider trading. If it happened then, I see no reason why it wouldn't happen now. However, realistically speaking, I can't see how all the people who have inside knowledge would be able to be traced.

 

[sam21poddy]

In addition to my above post, I have also seen insider trading of mortgagee sales of properties. Even though the law says that a mortgagee bank must offer a property for sale for a reasonable market price having regard to all the prevailing market conditions, the fact is that people in the loop get to buy these properties cheap. As long as the mortgagee bank gets all its money back, it doesn't care what happens as the balance goes to the mortgagors, however the mortgagors have been bankrupted and are in no position to sue the bank for failing to sell their property at a reasonable price. And even if the mortgagors were so minded to take action against the mortgagee banks, they wouldn't recognise that anything wrong had happened. So my advice would be if you are facing bankruptcy - ALWAYS sell your house yourself before the mortgagee takes possession of it. That way you will be in control of the selling price.

 

[tech/a]

Sam what you say is true to an extent.
There will always be instances where people will be privy to information before it is released to the market or in a "loop" so to speak or in a position to take advantage of situations before others are.

As shown above only 324 of 18917 or 1.7% warrented further investigation.
So I see most of this s perception issue rather than an epidemic.

I say find yourself loops and get in a position to take advantage of them.

 

[sam21poddy]

tech/a

I'm out of the workforce now and out of the rat race so I can't find any "loops" now. However, if I had any children to pass advice on to, your advice would be exactly what I would tell them. As for me, it looks like I will have to try and earn an honest living from share trading !

 

[tech/a]

tech/a

I'm out of the workforce now and out of the rat race so I can't find any "loops" now.

I think you maybe suprised.
Us old guys have a degree of "comfort" in us that people feel able to confide in.

You'd be suprised how many younger guys froth at the mouth to impress and give away more than they would have liked.

I was one once.

You know V.I.P Lawn Mowing and V.I.P everything else.Was Australia's biggest franchise.
Well Guess who gave Bill Viss the idea.(He then owned V.I.P Car sales and came to look at a ute I was selling)
This young guy who spent 2 hrs telling Viss how he made more out of the client contact than the lawn cut and put them together and sold a lawn round a year with a partner who had another lawn round and we joined forces.

Yep you guessed it----Yours truely.

 

[mit]

Slightly off-topic, but I was wondering where the line is with market manipulation. I currently own IIN and noticed that two days ago was a large dip and since then two large up days. I have heard that a dip after a breakout is sometimes called a fake-out.

It occured to me that if you had shares in a company and wanted to buy more you could quickly sell the bids down and then as all of the stops get hit buy a bigger volume as the price recovers. Not to say that this is what happened with IIN (and also TAP recently) but to me it is possible.

Is this illegal?

MIT

 

[happytrader]

Hi Mit

I can't imagine why this strategy would be and should be illegal. The reality is if someone in any market does not know the value of their assets they are always open to 'suggestion' and to make emotive decisions. With a bit of help from the media and a quick sell down for reinforcement, confidence is bound to get shakey for these ones. Enter the bargain hunter who has been waiting for that stock or asset to be reduced to the right price.

I love fire sales and buying in season. Don't you? I'm always trying to get a discount or a better deal on anything and everything. I mean aren't we all? Isn't that what we are doing in the market?

Cheers
Happytrader