insider trading in three easy steps

Legal insider trading in three easy steps, brought to you by JP Morgan and the SEC
KEVIN WILSON, MARIA CHRISTINA PADRO, JULIAN ASSANGE & staff
March 16, 2009
A confidential memo obtained by Wikileaks shows that not only has the U.S. Securities and Exchange Commission created an insider trading loophole big enough to drive a truck through, but that Wall Street is taking full advantage of it, establishing 'how-to' programs and even client service divisions to help well-heeled clients circumvent insider trading regulations.
Most of us think of insider trading as illegal. It allows those with inside knowledge to tilt the playing field, with the small investors invariably losing to the privileged few. Unfortunately for the small investor, the big boys get to play by different rules, and it has all been made legal, thanks to the SEC.
In 2000 the SEC promulgated Rule 10b5-1. The new Rule was designed to address the confusion caused by a series of court decisions that had left investors uncertain about what constitutes insider trading. Rule 10b5-1 was designed to "clarify" what constitutes illegal insider trading.
But top Wall Street houses were not to be deterred from advantaging their big clients at the expense of their small ones. Wall Street firms like JP Morgan found loopholes in Rule 10b5-1 that allowed them to continue trading on inside information "legally." Indeed, JP Morgan has gone so far as to set up an entire 'selling program' within its Securities division to help their clients profit from the loophole.
Documents obtained earlier this month by Wikileaks from JP Morgan Private Bank, which subtitles itself as "World class solutions for wealthy individuals and families", show the firm has a dedicated '10b5-1 Selling program,' along with a 'dedicated 10b5-1 team' to help its clients take advantage of the loophole.
Here's how it works:
1. An insider client transfers all or a portion of their company stock into a JP Morgan Securities Inc. brokerage account.
2. The insider then develops, in conjunction with the 10b5-1 team, a 'phased, pre-planned sales program to be executed at either market or specified prices'.
3. Depending on the information available to the insider (but not the public), the insider can decide whether to execute the sale or not.
By gaming the system this way, JP Morgan teaches insiders how to use their knowledge to create a rigged market, one in which it is the "house" that always wins, and the small investor that always loses.
Alan D. Jagolinzer, an assistant professor at Stanford University Graduate School of Business, completed a study of roughly 117,000 trades in 10b5-1 plans by 3,426 executives at 1,241 companies. He found that trades inside the plans beat the market by 6% over six months. By contrast, executives at the same firms who traded without the benefit of plans beat the market by only 1.9%.http://businessweek.com/magazine/content/06_51/b4014045.htm
One can only guess at how many wealthy executives profited under JP Morgan's "insider trading program," leaving small investors holding the bag.

Comments

Post a Comment

don't be a douchebag. i don't piss in your pool...

Popular posts from this blog

Soylent.Green

Image
Set in the year 2022, Soylent Green depicts a dystopia , a Malthusian catastrophe that occurs because humanity has failed to pursue sustainable development and has not halted uncontrolled population growth ; New York City 's population is 40,000,000, with more than half of it unemployed. Global warming , air and water pollution have produced a year-round heatwave and a thin, yellow, daytime smog . Food and fuel are scarce resources, because of animal and plant decimation, housing is dilapidated and overcrowded, and widespread government-sponsored euthanasia is encouraged to control and reduce overpopulation. Meat, bread, cheese, fruit, vegetables, and even alcoholic beverages are scarce and extremely expensive; for example, a six- ounce jar of strawberry jam is 150 "Ds" ( US Dollars ). Like the soylent food factories, the farms producing foodstuffs are heavily guarded and off-limits to civilians. For most of the populace, natural foods are a rarely, if ever, enjoy...
Read more

So, We are gonna arm the Sunnis'

Mr. Gates our present Sec of Defence cut his teeth on this little number -- it was called the -- Iran-Contra Affair . Arms transaction The Iran-Contra report found that the sales of arms to Iran violated United States Government policy; it also violated the Arms Export Control Act . [2] Overall, if the releasing of hostages was the purpose of arms sales to Iran, the plan was a failure as only three of the 30 hostages were released. [9] First arms sale Michael Ledeen , a consultant of Robert McFarlane , asked Israeli Prime Minister Shimon Peres for help in the sale of arms to Iran. [11] The general idea behind the plan was for Israel to ship weapons to Iran, then the US would reimburse Israel with the same weapons. The Israeli government required that the sale of arms meet high level approval from the United States government, and when Robert McFarlane convinced them that the U.S. government approved the sale, Israel obliged by agreeing to sell the arms. [11] Reagan approved M...
Read more

Spam King pleads Guilty!

looks like 'Spam King' Adam Vitale has finally plead guilty to violation of the CAN-SPAM Act of 2003 in federal court in New York City. 'The indictment said that in less than a week in August 2005, Vitale and Moeller sent e-mails on behalf of the informant to more than 1,277,000 addresses of subscribers at AOL, the online division of Time Warner Inc. Vitale will be sentenced on September 13 when he faces a maximum sentence of 11 years in prison.
Read more