Insider Trading Is More Commonplace Than You Might Think

As many as one-fourth of all mergers and acquisitions of public companies in the U.S. appear to be the targets of undetected insider trading by investors with advance knowledge, according to a New York Times report on research by Menachem Brenner and Marti G. Subrahmanyam of New York University and Patrick Augustin of McGill University. The researchers discovered the instances of what they call “informed trading” through a statistical analysis of stock-option movements; fewer than 5% of the deals became the subject of Securities and Exchange Commission litigation over insider trading.

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