Comments on: Insider Trading: From Texas Gulf to Cioffi http://www.hedgeworld.com/blog/?p=145 A look behind the hedge fund curtain Thu, 23 May 2013 11:00:53 +0000 http://wordpress.org/?v=2.6 By: Christopher http://www.hedgeworld.com/blog/?p=145#comment-13945 Christopher Wed, 01 Dec 2010 14:31:29 +0000 http://www.hedgeworld.com/blog/?p=145#comment-13945 Yes, I'm slow to reply to both of you gentlemen. Recent headlines have made it sensible to revisit the issue. So here goes. Mr Matthews, I think the example you cite is inapplicable. You say that if you were to collude with others "to talk up a stock by lying about orders and profit forecasts before selling" your holdings then that would be prohibited as insider trading. It certainly would be prohibited. And rightly so. But it wouldn't be insider trading. You don't have to be an insider to pump-and-dump, just a good liar. Even if you happened to be an insider of the issuer involved in your pump-and-dump scheme, that fact would be irrelevant to the scheme as you've described it. Dr. Bernstein, I appreciate your observation. Thanks. Yes, I’m slow to reply to both of you gentlemen. Recent headlines have made it sensible to revisit the issue. So here goes.

Mr Matthews, I think the example you cite is inapplicable. You say that if you were to collude with others “to talk up a stock by lying about orders and profit forecasts before selling” your holdings then that would be prohibited as insider trading.

It certainly would be prohibited. And rightly so. But it wouldn’t be insider trading. You don’t have to be an insider to pump-and-dump, just a good liar. Even if you happened to be an insider of the issuer involved in your pump-and-dump scheme, that fact would be irrelevant to the scheme as you’ve described it.

Dr. Bernstein,

I appreciate your observation. Thanks.

]]> By: walter bernstein ph.d. http://www.hedgeworld.com/blog/?p=145#comment-2652 walter bernstein ph.d. Mon, 28 Dec 2009 12:44:31 +0000 http://www.hedgeworld.com/blog/?p=145#comment-2652 The author brings up a valid point. In my experience government prosecutors( CID etc) only go after insider traders who are well known so that they can get promoted. The increase in pay lets these gov't workers bend the insider trading violation too their narrower interpretation such as in the case of Martha Stewart whom even though I don't know her might not have fully understand the governments interpretation of "INSIDER TRADING'. The author brings up a valid point. In my experience government prosecutors( CID etc) only go after insider traders who are well known so that they can get promoted. The increase in pay lets these gov’t workers bend the insider trading violation too their narrower interpretation such as in the case of Martha Stewart whom even though I don’t know her might not have fully understand the governments interpretation of “INSIDER TRADING’.

]]> By: Ian Matthews http://www.hedgeworld.com/blog/?p=145#comment-1615 Ian Matthews Mon, 08 Sep 2008 10:16:41 +0000 http://www.hedgeworld.com/blog/?p=145#comment-1615 You validate your argument with one dismissive comment, "This is a worthless idea" I am not an academic but markets rely on trust and integrity to function. Markets fuel the economy by facilitating corporate funding. If the market is corrupted by a proportion of the population having knowledge that is not available to the public domain then the market is no longer free in any sense. If I collude with others to talk up a stock by lying about orders and profit forecasts before selling my holdings that is fraud perpetrated by insider trading--two people based in the UK discovered a time lag in a betting operation in China where they could place a bet with full knowledge of the outcome, clever to exploit the technology but still dishonest. Without trust, honesty and integrity, everything fails. We all know what we are doing, if we act differently because we have access to real facts that are not available to others whose actions may be affected by the way we act then in my terms that amounts to insider trading. You validate your argument with one dismissive comment, “This is a worthless idea” I am not an academic but markets rely on trust and integrity to function. Markets fuel the economy by facilitating corporate funding. If the market is corrupted by a proportion of the population having knowledge that is not available to the public domain then the market is no longer free in any sense. If I collude with others to talk up a stock by lying about orders and profit forecasts before selling my holdings that is fraud perpetrated by insider trading–two people based in the UK discovered a time lag in a betting operation in China where they could place a bet with full knowledge of the outcome, clever to exploit the technology but still dishonest. Without trust, honesty and integrity, everything fails. We all know what we are doing, if we act differently because we have access to real facts that are not available to others whose actions may be affected by the way we act then in my terms that amounts to insider trading.

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