Known examples of insider trading

History knows a large number of cases of insider trading. Many of them were uncovered due to mere chance or one's own indiscretion.

Martha Stewart's Insider Trading

Martha Stewart became famous in the United States as an author of books on housewifery and a television host of various shows on the subject. However, her reputation was dealt a serious blow after the insider trading scandal. Martha Stewart's insider trading involved information from Sam Waksal, owner of the pharmaceutical firm ImClone Systems. In 2001, he informed Martha that the development of an announced cancer drug had failed. As a result, Stewart sold her stock, and thus managed to make a profit of USD 45,000. However, the operations to sell ImClone Systems shares were of interest to the regulatory authorities. Waksal actively disseminated information even before the statement was issued, which accordingly affected the quotations. Among the "victims" was Martha Stewart. The court sentenced her to five months in jail. Against the backdrop of this scandal, the quotes of Martha Stewart Living Omnimedia collapsed, which led to significant financial losses for the TV host herself.

Spiegelman's insider trading

One of the most sensational insider trading scandals took place against the backdrop of the Procter & Gamble and Gillette merger. The deal is to be conducted by Merrill Lynch Bank. Stanislav Spiegelman, an employee of the bank, knew about it and disclosed this information to his friends and colleagues at rival Goldman Sachs - Eugene Plotnik and David Pajcin. Taking advantage of this information, the bankers were able to earn about $100,000 USD on the stock. In addition, the colleagues told their relatives and acquaintances about this information. So Patsin's girlfriend Monika Vujovic made 313,400 USD on this information, Carpenter's father - 63,000 USD, and Carpenter's softball partner Elvis Santana - 463,200 USD. The partners wanted a similar scheme in the Adidas and Reebok merger deal. Stanislav Spiegelman also knew about that deal. However, the colleagues were ruined by the careless dissemination of information. When Paitzin's aunt, a 63-year-old retired seamstress, made USD 2 million, the regulatory authorities launched an investigation. The United States Securities and Exchange Commission (SEC) found the use of insider information. Carpenter and Spiegelman were sentenced to 38 months and 58 months in prison, respectively. Pajcin violated the terms of his probation and fled the United States.

Peter Cho's Insider Trading

Peter Cho's story is an example of the accidental acquisition of key information. The incident happened in 2016. Cho's wife was an investment banker who worked at Bank of America. One day she was on the phone discussing a deal involving Virgin Airlines, which was to buy out Alaska Airlines. Peter Cho overheard this conversation by chance and decided to make some money off of it. Cho made a bet on binary options by selecting the buyout option. The amount of the deal he opened was USD 250,000. The insider himself was able to earn 500,000 USD on the obtained data. However, Cho's rapid enrichment interested the SEC. The Commission ruled that he had used insider trading. Cho did not deny his guilt, but he did not admit it either. In a pre-trial settlement, he agreed to return the amount he earned and pay a fine of a similar amount. Cho had to pay a total of $532,000. The story also put a stain on the reputation of Bank of America.

__________________________________________________________________

Also, if you want to use all available trading tools to increase your profits as soon as possible - follow this link below, or contact us via live chat. Our experts will help you to choose the best strategy for success.

Follow our updates for useful information in our series of articles. You can also visit our previous article to better understand this topic.