Insider's Strikeout with Short-Swings
What can't insiders get away with?
The news is full of cases of insiders making flagrant trades, take
Trevor Milton, founder of electric truck startup Nikola (pictured
above). Whose stock tanked when it was revealed promotional video of
his electric truck "driving" was just it rollling down a hill with
removed to prevent risk of fire. Mr. Milton was later prosecuted by
the SEC for false and misleading statements to investors. Clearly
lying about your business is prosecutable.
Where's the bar insider's are locked up for limboing under?
It might be higher than you think. SEC Rule 10-5b prohibits using
confidential corporate information to reap a profit or avoid a loss
by trading a companies stock, or tipping third-parties off so they
can reap a profit. Of course, if this rule was effective it would be
the only one the SEC needed. Something more concrete is the
profit rule. If an insider profits from making both a buy and sell
within a six month period they must return all profits, not pass go,
and not collect $200. A sad truth for people looking to day trade
insider sentiment but, a hopeful signal for value investors looking
to trade underlying companies.