Do Short Sellers Front-Run Insider Sales?

Discussion in 'Trading' started by dtrader98, Nov 12, 2008.

  1. "We find evidence of significant increases in short sales immediately prior to large insider sales, consistent with information leakage and front-running. We examine a number of alternative explanations that the increase in short sales is driven by public information about the firm or about the impending insider sale, but the evidence is inconsistent with these explanations. Information leakage undermines market integrity and can lead to limited market participation and inefficient capital allocation. The results in this paper therefore have implications for the enforcement of insider information regulations and for timely disclosure of short sales information by stock exchanges."

    Keywords: Short Selling, Insider Sales, Front Running, Information Leakage
  2. Surprised to see no commentary on this.

    If an academic institution on the outside can detect this, why on earth can the SEC with it's myriad of money and resources not? Honest traders should be up in arms about this double standard (I know I am).
    Not so much about short selling (which is fine), but that the proliferation of front running and insider trading by large players is alive and well, easily detectable, yet, largely ignored by those expected to police it.
  3. W4rl0ck


    Do Short Sellers Front-Run Insider Sales?

    The answer is YES!



  4. Honest traders should be up in arms about this

    So far counting yourself there is one honest trader.:D