Sponsored Video: Thoughts on Company Secrets and Insider Trading

by Darwin on June 17, 2013

This post is sponsored by PA Consulting:

You can’t turn on the news these days without seeing a story about insider trading, accusations, prosecutions and even “abnormal volume” tied to certain company stocks just prior to a major announcement like an acquisition or surprise earnings report.  The funny thing is, these are just the ones that prominently grab headlines!  What about all the little one-off situations where someone in a company has access to insider information and acts on it alone, so their buddies, hedge funds and everyone else with the worst-kept secret of the week doesn’t profit at the same time?  I’ve never seen any studies on this, but I also wonder if this is a greater problem with small-cap stocks compared to blue-chips, as larger names draw more scrutiny and are probably more likely to be caught/prosecuted and at the same time, I would assume internal compliance and controls are much more robust at more established companies.  But I digress…

Take a look at this video by PA Consulting and let me know if you think this can happen in your office?

In this video, you see some potential and completely plausible scenarios where both executives and assistants are using insider information with social media accounts to manipulate stock prices or even just perhaps stoke their own ego.  For whatever reason, believe or not, some people do share insider information from their company on social media accounts (often anonymously) without acting on it themselves!  Either they feel they’re doing the public some sort of service, or they’re trying to send a message, or perhaps just feel like they’re being heard.  Companies usually pounce on this sort of behavior quickly and root out the source, but it can be damaging in the interim nonetheless.

Have You Ever Had an Insider Information Disclosure Situation At Your Firm?

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