Insider Trading on the Rampage

Discussion in 'Wall St. News' started by archon, May 23, 2007.

  1. archon

    archon

    It seems like everywhere you look these days, there are more cases of shady insider trading, particularly concerning options. You can hardly pick up a magazine, turn on the TV or surf the web for financial news without being reminded of it. For example:
    When Greed is Bad - Insider Trading

    Heavy trade in aQuantive options raises questions

    The Sad Truth About Insider Trading in Options

    SEC says jumps in options trading point to possible insider trading

    TXU? Dow Jones? Aquantive? Acxiom? The list goes on and on, and it's more than a little disturbing. I'm not sure what to make of this flurry of headlines. There seem to be two camps on this. One that says there is an epidemic of insider trading in the options market these days and another that says this is just business as usual for options and the world is just waking up to this fact. I'm leaning toward blaming the influx of hedge funds into options in recent years. We all know that wherever hedge funds go, shady dealings follow. Call me cynical, I guess.
     
  2. I agree with you on the hedge funds, I am not a big fan.. I understand their existance for ultra high net worth individuals but at this point all they seem to be offering is glorified mutual funds. No thanks, would prefer to stick with real mutual funds and know that I have regulators behind me.

    With regards to insider trading, I think it's simply the current higher highs we're seeing in the markets...everyone seems to feel entitled to make it big and those that can't try to use shortcuts..afterall, in a market where everyone seems ot be making money, if you're only making average returns that only makes you...well...average :)

    It's dispicable.
     
  3. archon

    archon

    At this point, are they even worth it for high net worth individuals. Is any fund manager really worth 2% & 20%?

    As for the insider trading, call me paranoid, but it seems that the influx of insider trading in options correlates perfectly with the influx of hedge funds into that space

    Of course, some of the recent stuff is so obvious and so stupid that it is even beneath hedge funds. Loading up on 10,000 Dow Jones upside calls right before the takeover bid is announced!?! That's just dumb. Even the idiots at the SEC will pick up on that one.

     
  4. 2% and 20% is so yesterday.

    5% and 44% is where's it's now. :eek:
     
  5. The word is, in markets like this, it is easy for the regs to pinch some suckers and say "see, we're protecting investors". You don't see them pinch any big names. They'll say, "when it's a hedge fund, they do so many trades, they are bound to hit some takeovers."

    This comes from way up, and sourced twice. It is the same old, same old.

    If you read the Aguirre testimony, that shows you it's a two - tiered system. They are just pinching the idiots for show.
     
  6. archon

    archon

    I'm not following you there, friend. What are you trying to say?

    Although I think I agree with your overall point that the SEC and others (Spitzer, etc) are only trying to placate retail investors. Most of these insider trading "investigations" are really just lip service to appease the masses.
     
  7. That's what I was trying to say.

    However, on another point, this SEC action allowing retail investors to sue the Investment Bankers over Worldcom and Enron is really strange. Most people though, out of cynacism I guess, that they would side w/ their masters in NY. I think they are being leaned on big time.
     
  8. archon

    archon

    That link is all about hedge funds, and there is definitely a school of thought that all of this shadiness in the options market coincides with the rise of hedge funds as options players.

    I tend to agree with that opinion. Just look at what Cramer essentially admitted to doing in his infamous interview about market manipulation. Where hedge funds go, shady dealings follow. It's just a fact of life. Now that these funds are becoming acclimated to the derivatives world, it's only natural that the level of shady dealings would increase.
     
  9. The really good funds now ask 50/99%.
     
    #10     Jun 6, 2007