by Deb Cupples | Last week, the U.S. Securities and Exchange Commission reported:
"The Securities and Exchange Commission today charged seven individuals involved in an insider trading ring that generated more than $11.6 million in illegal profits and avoided losses.
"The SEC alleges that two mergers and acquisitions professionals, Nicos Achilleas Stephanou at UBS Investment Bank and Ramesh Chakrapani at Blackstone Advisory Services, L.P., tipped five individuals including Joseph Contorinis, a portfolio manager for a Jefferies Group, Inc. hedge fund, with material nonpublic information about three impending corporate acquisitions."
Basically, "Insider trading" involves people who are privy to information that the investing public does not know -- which gives the insiders an ability to rig the game against the ordinary investing public.
Often, ordinary investors are victims of insider trading. For example, if company insiders know that the government is about to rule against the company (and that the company's stock prices will plummet as a result), an insider might dump the stocks before the public learns about the government ruling -- thereby, shifting losses to the ordinary investors who buy the stocks.
Its for good reason that insider trading is illegal.
Comments