Insider trading
Insider trading is the term for using non-public, little-known information before it is released to the public to trade in stocks or other financial instruments and thereby profit. It is illegal, and is under the jurisdiction of the Securities and Exchange Commission.
Several corporate PR advisers have been charged with using market sensitive information on companies they were advising for their financial benefit in trading shares (insider trading).
- In March 2005 the Holmes Report noted that Robert Goehring, the former corporate communications director for Gerber Scientific, had been charged with five counts of insider trading. "Prosecutors allege that in 2000, Goehring bought and sold Gerber common stock and shorted that stock while in possession of material non-public information about the automation systems maker. As a a result of his purchases and sales, prosecutors say, Goehring obtained more than $42,000 in illegal profits and avoided losses of more than $54,000," The Holmes Report noted.
Congressional insider trading
At present, nothing forbids a member of Congress, or one of their staffers from benefitting from inside knowledge of how a committee or leadership decision or a will affect a company's stock price. An example of this were the actions of Tony Rudy, an aide of Tom DeLay, who made a number of stock trades based on his very inside knowledge of what DeLay was going to do.
In March 2006, House Democrats introduced a measure to put Congressional members and staffers under the same rules as everyone else. Rep. Louise Slaughter (D, New York) and Rep. Brian Baird (D, Washington) were the sponsors.
External links
- "Former Gerber Scientific Communications Exec Charged with Insider Trading", Holmes Report, March 7, 2005.
Sources
- Brody Mullins, "Bill Seeks to Ban Insider Trading by Lawmakers and Their Aides", the Wall Street Journal, Tuesday, March 28, 2006, p. A1.
