More BS on Wallstreet

A lot of money is made on insider info that would scare the dickens out of the investing public if it's ever made public. Someone very close to me works at one of the largest VC firms in the US and sees top executives from Fortune 500 companies every day. With a "wink wink" and a "nod nod" these executives share amongst each other what to buy or sell. Sometimes this info is a few weeks before the actual event (especially for mergers/acquisitions), but sometimes as short as a day or two notice for earnings release.

In this old boy's club, it's known that you are not allowed to abuse the system. Don't buy or sell abnormally outside your regular trading habbits. It's the greedy Martha Stewarts of the world that get caught. The rest of the execs in the old boy's club just make extra money here, there, everywhere.
 
dottom -

Martha's not even in the league of the "greedy".

Assuming she did bail on her Imclone shares thanks to a call from her buddy Waksal, we're only talking about 4,000 shares.

Compare that to Larry Ellison dumping $1 billion in Oracle stock a couple of years ago while he and his CFO kept talking up how Oracle was immune to the economic downturn - only to disclose in the 11th hour (long after both Ellison and the CFO dumped a bunch of stock) that "Oh my - I guess we aren't immune afterall and by the way, we're going to miss our forecasts by a lot" (upon which the stock nose dived).

Now that's greedy and pretty clear insider dealings and maybe even fraudulant manipulation - but nobody even bothered to investigate it.

What about all the dot com frauds? The Enron gangsters are still free.

You know, I really can't stand her - but Martha's a mere infant by comparison to these other guys - the Feds should spend the money to prosecute all these other crooks before wasting time over a lousy 4,000 share transaction.
 
OK here is a question of who knows what.

PSS on Wednesday someone opened 250 Nov 50 Puts, on Thursday another 250 were opened and the stock closed at it's low. Total 500 contracts when normal open interest is 20 or so. Today an analyst downgrade and a drop to 48.25, and a company press release reaffirming guidance on three news wires.

Would love to have some opinions on what is going on.
 
ArchAngel,

You are quite right on relative sin of Martha's insider trading vs. others. What I meant to say is that there is a hidden rule amongst executives who share "wink winks" and "nod nods" that if you're going to profit from insider trading, don't trade any more or less than you usually do. If your normal size is 10,000 shares of something, then just trade your normal size and make it look like routine trading or portfolio adjustments.

Also, most executives are smart enough to initiate trades a week or two in advance. Granted there is more risk, but if you're talking about major info that will move a stock the small time risk is no big deal.

Of course, I've always thougth that anyone looking to profit from insider info can do it in so many different ways than buying/selling the stock directly. First, you can get much more leverage with options, but if you make too much with options that will be a red flag. How about loading up on a high correlated stock or index? Or what about a complex combination of underlyings and options (that you can justify if SEC inquires). If it looks like you are trading based on some strategy other than just pure insider info, you have an alibi.
 
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