Posts Tagged ‘insider information’

Insider Trading Is Legal For Members Of Congress – And They Refuse To Pass A Law That Would Change That

Insider Trading Is Legal For Members Of Congress – And They Refuse To Pass A Law That Would Change That

Courtesy of Michael Snyder at The American Dream

Is insider trading wrong?  Most Americans would say that it is.  In fact, some very wealthy and very prominent Americans (including Martha Stewart) have gone to prison for it.  It just is not right for those with inside information that is not generally available to the public to make huge profits in the stock market by making key trades based on that information. 

But there is one group, members of the U.S. Congress, that can do all the insider trading they want and get away with it.  That is because insider trading is perfectly legal for members of Congress.  Yes, you read that correctly.  So how would that work?  Well, for example, a member of Congress may know that a law that is about to be proposed would have a very positive effect on a particular company and could buy up a ton of stock in that company a few days before that law is introduced.  Isn’t that wrong?  Of course.  Is there any law against it?  Not at all. 

You would think that some of the more ethical members of Congress would want to close this glaring loophole, but it just isn’t happening.  Legislation has been introduced from time to time that would end this practice, but it has gotten very, very little support.  The Wall Street Journal recently published an article about this issue which described the current situation this way….

"A few lawmakers proposed a bill that would prevent members and employees of Congress from trading securities based on nonpublic information they obtain. The legislation has languished since 2006."

But even though insider trading is legal for members of…
continue reading


Tags: , , , , , , , ,




Do Hedge Funds Trade On Insider Information?

Do Hedge Funds Trade On Insider Information?

Courtesy of Tyler Durden

A very interesting research paper currently in publication by a team from York University headed by Nadia Massoud asks "Do Hedge Funds Trade on Private Information? Evidence from Syndicated Lending and Short-Selling" and analyzes whether or not hedge funds actively trade in the public securities of companies that had approached said hedge funds with private, capital structure specific (in this case loan syndication and amendment) information. The paper focuses on the period between 2005 and 2007, when the first wave of second- and third-lien debt that had been issued by crappy companies to hedge funds, was starting to become impaired and led to wave after wave of covenant and other bank loan amendments, designed to allow the borrower some breathing room.

Massoud also tracks whether or not in the days preceding the public announcement of a covenant amendment, traditionally seen as a sign of weakness by any borrower company, there was a spike in short-selling activity by hedge funds, courtesy of an interval between January 2nd 2005 to July 6th 2007, when RegSHO had made public extensive detail on equity short-selling data (why this is no longer the case one has to ask the corrupt SEC, but that is a question for after the next 10,000 point Dow flash crash when the SEC’s headquarters will finally be surrounded by rioting former investors who have had enough). The paper finds conclusive evidence that companies that come to lenders in hopes of amending syndicated credit facilities do indeed see aggressive shorting of their stock into the days preceding the formal announcement, implying that there is obviously material non-public information abuse and frontrunning. Here, the authors of the paper however, make a blatantly wrong assumption that this frontrunning originates almost exclusively from within the hedge funds that had been approached with the material non-public disclosure of weakness. We are happy to demonstrate that not only is that not necessarily the case, but to explain why certain sections of FT holding company Pearson can charge over $100,000 a year for premium subscription to their content by rich hedge fund subscribers, thereby once again creating a very tiered information market. We speak of course of Pearson niche media subsidiary www.debtwire.com

First, a brief observation of the York paper’s conclusions. As the charts below summarize, there is almost no doubt…
continue reading


Tags: , , , , ,




HOW LONG WAS GALLEON TRADING ON INSIDER INFORMATION?

HOW LONG WAS GALLEON TRADING ON INSIDER INFORMATION?

Courtesy of The Pragmatic Capitalist

Raj Rajaratnam, GalleonReader DanH was nice enough to forward us a recent copy of Galleon Groups performance going back to 1992.  It turns out that the fund was Madoff-like in its performance.  These guys just couldn’t lose.  Whether the market was up or down they cranked out 25% returns like they were printing money.  It makes you wonder just how long these guys were trading on insider information?

I have run the risk adjusted returns on hundreds if not thousands of portfolios throughout my career and I have never seen numbers like these.  NEVER.  There is virtually ZERO downside volatility in these figures.  Their largest one month drawdown was -6.19%!  That is simply unheard of for a portfolio with such high returns.  Gauging from the returns I would be willing to bet the insider trading was going on for most of Galleon’s existence and was likely much more rampant than currently reported:

Galleon 1Galleon2

 


Tags: , ,




Insider Trading: Raj Rajaratnam Of Hedge Fund Galleon Group Charged

Insider Trading: Raj Rajaratnam Of Hedge Fund Galleon Group Charged

Courtesy of Market Folly

Raj Rajaratnam, founder of hedge fund Galleon Group has been charged with insider trading in a $20 million case as he and five other people were allegedly involved, including a former Bear Stearns executive and an IBM executive. The charges say that the six accused used insider information in two schemes where they traded shares of Google (GOOG), Polycom (PLCM), Hilton Hotels, and Advanced Micro Devices (AMD).

This case is interesting in that it is the first time wiretaps have been used to target insider trading. The insider information apparently came from numerous sources, including other hedge funds, investor relations firms, and the companies listed above whose shares they traded. Rajaratnam faces 12 total fraud and conspiracy counts, many of which have up to a 20-year maximum sentence. Prosecutors had been investigating this case ever since 2007 when a non-named person began complying with the FBI. That person apparently had been using insider information and tipping off Rajaratnam since 2006.

The Wall Street Journal has dug into one particular case of the insider trading events regarding shares of now private Hilton Hotels. They write,

"The deal is the early July LBO of Hilton Hotels. According to the regulator, on July 2 at 2:20 p.m., Hilton executives called the lead analyst covering the hotel for Moody’s. The purpose of the 7-minute call isn’t detailed. The SEC does say that at some point in the call the Hilton executives informed Moody’s that their company was being taken private by Blackstone Group and that the deal likely would be announced sometime before the Fourth of July.

There are two Moody’s analysts mentioned in the complaint, a vice president and senior analyst that was the credit rater’s lead analyst on Hilton and an associate analyst “involved” in rating Hilton. The lead analyst took the Hilton call. One analyst then told someone identified as “the cooperating witness” of the pending deal. The SEC says it reviewed phone records for the Moody’s analyst’s cellphone that show the analyst made three phone calls to the cooperating witness from 3 p.m. to 3:15 p.m. that same day. The cooperating witness provided the Hilton information to Rajaratnam, saying that it was “a sure thing.” The SEC says trading records show that Galleon…
continue reading


Tags: , , , ,




 
 
 

Phil's Favorites

How a Swiss bank was toppled by a financial scandal in Malaysia - and what can be learned from it

 

Embed from Getty Images

 

How a Swiss bank was toppled by a financial scandal in Malaysia – and what can be learned from it

Courtesy of Salvatore Cantale, IMD Business School and Ivy Buche, IMD Business School

The world’s biggest financial scandal, over missing b...



more from Ilene

Zero Hedge

The 1997 Asia Crisis: "We Were There"

Courtesy of ZeroHedge. View original post here.

Authored by Nicholas Colas via DataTrekResearch.com,

Having covered cyclical industries (primarily autos, in my case) since the early 1990s, I vividly remember every financial crisis of the last 30 years because “my” stocks always get destroyed in the process. Based on that experience I can tell you every such event feels unique and shocking as you transit through them. To borrow from Tolstoy, every happy market is the same, but every crisis market is different in its own way.

...



more from Tyler

ValueWalk

Senator Elizabeth Warren Speaks with Jim Cramer [TRANSCRIPT]

By Jacob Wolinsky. Originally published at ValueWalk.

The following is the unofficial transcript of a CNBC interview with Senator Elizabeth Warren and CNBC’s Jim Cramer on “Mad Money w/ Jim Cramer” (M-F 6-7PM) today, Wednesday, August 15th. The following is a link to video of the interview on CNBC.com: https://www.cnbc.com/video/2018/08/15/sen-elizabeth-warren-trade-deals-help-companies-not-workers.html.

...



more from ValueWalk

Kimble Charting Solutions

Are Commodities Sending Global Macro Message To Investors?

Courtesy of Chris Kimble.

Commodities are becoming a hot topic… and an important investing theme. With the US Dollar coming back to life, commodities have pulled back. And that pullback now has the “equal weight” complex in trouble.

Below is a chart of the Thomson Reuters Equal Weight Commodity Index. The green shaded area represents a 20-year rising channel (point 1).  Within that channel, however, commodities have formed a multi-year downtrend (point 2 – marked in red).

Using the all-time high and the early 2016 low, we can identify key Fibonacci levels. One level is the 23.6% Fib, which proved to be stiff resistance (point 3), marking a bearish reversal as well.

Currently, the Commodity Index is attempting to break 20-year channel support (point 4).

Investors should watch for ...



more from Kimble C.S.

Insider Scoop

Vertical Group Turns More Bearish On Tesla, Doesn't Expect Company To Go Private

Courtesy of Benzinga.

Related TSLA Upcoming Earnings: Tech Giant Nvidia Unveils New GPUs Ahead Of Q2 Results The Downfall Of Elon Musk ...

http://www.insidercow.com/ more from Insider

Chart School

Bitcoin Update - 6000 is support

Courtesy of Read the Ticker.

Demand shows it hand at support levels, well it obvious that $6000 BTCUSD is support so far.

More from RTT Tv , Ref: Brazil bitcoin currency , Brazil New Accounts
 


 

Main Chart in video



 

Sure fundamentals...



more from Chart School

Biotech

Here's what we know about CRISPR safety - and reports of 'genome vandalism'

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

 

Here's what we know about CRISPR safety – and reports of 'genome vandalism'

A standee of the movie ‘Rampage’ at a theater in Bangkok, Thailand. Scientists in the film used CRISPR to create a monster. By Sarunyu L/shutterstock.com

Courtesy of Jianhua Luo, University of Pittsburgh

A movie just recently released called “Rampage” features Dwayne “The Rock” Jo...



more from Biotech

Digital Currencies

What is a blockchain token?

 

What is a blockchain token?

What’s this digital token good for, anyway? knipsdesign/Shutterstock.com

Courtesy of Stephen McKeon, University of Oregon

People are just becoming acquainted with the idea of digital money in the form of cryptocurrencies like bitcoin, where transactions are recorded on a secure distributed database called a blockchain. And now along comes a new concept: the blockchain-based token, which I’ve been following as a blockchain researcher a...



more from Bitcoin

Members' Corner

There Are 3 Main Theories That Explain Trump's Approach to Putin and Russia-Which One Makes the Most Sense?

What do you think?

Thom Hartmann suggests that the "Manchurian Candidate theory" is the least likely explanation for Trump's pro-Russia behavior in "There Are 3 Main Theories That Explain Trump’s Approach to Putin and Russia—Which One Makes the Most Sense?" (below).  disagrees and suggests that Putin probably has "the goods" on Trump in "Trump’s Plot Against America". (To be fair, Hartmann acknowledges that his three theories are not mutually exclusive.) Jonathan Chait argues ...



more from Our Members

Mapping The Market

Mistakes were Made. (And, Yes, by Me.)

Via Jean-Luc:

Famed investor reflecting on his mistakes:

Mistakes were Made. (And, Yes, by Me.)

One that stands out for me:

Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. That was, until it wasn’t. I guess there’s a reason for the proclamation “The king is dead, long live the king” when a monarchy changes hands. As we continued to update the book, price-to-sales was no longer the “best” single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis—thanks to criticism of my earlier work—and realized that everything, including factors, moves in and out of favor, depending upon the market environment. I also realized...



more from M.T.M.

OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

more from Promotions

All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

more from David





About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>