All about Insider Trading

[Lucius]

Guys help naman o! How does this work sa PSE? Ano ba ung mga ethical issues regarding Insider trading sa stock market etct

Thanks!

[empy]

in essence, it's making money off tips that are not public information. for example, your dad is CEO of a company that is in negotiations to be purchased by another company. this info is not public knowledge, but you know that your dad's company's stock price will shoot up as soon as the deal is announced.

so you buy as much stock as you can and make money once the news breaks.

insider trading is illegal in most countries. ewan ko lang kung may law sa Pilipinas. whether it's ethical or not is debatable, i guess - but i believe that it is because there are many cases of insider trading where you are in essence taking advantage of those who know less than you.

[tsupermario]

*kapitan

for reference, read the Securities and Regulations Code (RA 8799) particularly Chap. 7 on Prohibitions on Fraud, Manipulation and Insider Trading

HTH

[wildthing]

pero in reality...most magagaling na traders are not just good because of a good makiramdam... they know how to read trends and will have some sort of an "insider information" of some businesses although not the very direct kind.

technically, that is illegal

[empy]

^yep, it's very hard to prove insider trading. the US SEC supposedly has sophisticated methods to red flag transactions that seem suspicious, and they also closely monitor corporate insiders and investment banks. but it is still very difficult to detect and even more difficult to prove in court

i guess the rule of thumb is that if you can prove that the information that inspired you to make the trade is public in any way - even if it is on the back page of the town paper - then it is not insider trading. kung trend analysis or extensive company research yung data mo, that's not insider trading as long as you're not privy to any trade secrets.

[Lucius]

Thanks! Padagdag ulit if meron pa kayong alam. Sa project kasi e hahaha ung isa kong groupmate na-mention involved din daw dati dito si Erap.