Insider Trading Is Easy -- So Is Getting Caught
At a time when CSI is the top-rated TV show in the country and a rerun of Law & Order is always airing somewhere, you'd think most smart folks would know how easy it is to get busted for committing a crime.
That's obviously not the case.
Witness Sam Waksal.
He founded ImClone (IMCLE), a biotechnology company that developed a drug to treat cancer.Bright guy. Unfortunately, he didn't exercise any of that brainpower before he tried to dump his own company's stock after finding out that the Food and Drug Administration would reject ImClone's Erbitux application. Waksal was just sentenced to more than seven years in federal prison for insider trading and related crimes. If only he'd thought about how simple it is for regulators to track every trade and uncover every phone call someone makes. The stock and options exchanges in this country have computer systems that monitor price and volume movements of securities in real time. These programs track the price and volume histories of all securities and flag any aberrations that would suggest something unusual. A stock might go up too much in one day. Or there might be a few big trades ahead of a corporate news event. If an exchange's surveillance team spots any odd movements, they will try to make sense of them, maybe calling a company to find out if there's news that's about to break. Or the investigators might check out big rises or falls in a stock around corporate news that's already public.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV