I get that the SEC monitors for spikes in trading and they take a look at people who sell a large amount of stock before a major event and stuff like that. Is that really enough to prove them guilty, I thought it needed to be undoubtedly proven to be convicted for it, like they have a phone recording of you receiving the information, even though you sold a load of stocks at exactly the right moment that doesn’t necessarily prove that you had insider information. You could have predicted it and moved accordingly by analyzing the companies and coming to your conclusion.
In: Economics
With great difficulty. First off you have to find the spikes indeed that happen shortly before a significant event.
It doesn’t end there of course. If someone whom certainly has access to privileged information does this, well that is an easy one. You’re on the board of directors, of course you had the info.
Beyond that it is extremely difficult to get convictions for insider trading to the point that we even had a famous case here during the banking crisis where the wife of the then Secretary of Something, sold off a buttload of shares in a big bank, days before the bank where her husband was on the Board of Directors, announced their plans which essentially meant breaking up the bank, which cratered the value.
Their defense: “I never talk to my wife about work.”
It worked.
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