Insider Trading is rife on Wall Street

[Maenad]

Not that it's particularly surprising, but it appears that there's systemic insider trading that benefits the biggest players: https://www.economist.com/news/finance-and-economics/21736561-one-study-suggests-insiders-profited-even-global-financial-crisis-another

Basically, this boils down to another reason why being an active trader as an individual is largely a fool's errand - you'll never keep up with those that have the inside info.

[hodedofome]

Unless you’re playing in areas the insiders aren’t, or you have a system that might help you piggyback on their trades. Everyone has to know their edge, if you don’t know you don’t have one.

As far as trading after TARP was announced, the govt told everyone how much money they were spending and which banks it was going to. Some traded on this info some did not. But it was publicly available, not insider.

[toganet]

As far as trading after TARP was announced, the govt told everyone how much money they were spending and which banks it was going to. Some traded on this info some did not. But it was publicly available, not insider.

Yes, but did everyone find out at the same time?  Obviously if you have advanced notice of news like that, and you act on it, it's still insider trading -- even if the news becomes public later.

[hodedofome]

As far as trading after TARP was announced, the govt told everyone how much money they were spending and which banks it was going to. Some traded on this info some did not. But it was publicly available, not insider.

Yes, but did everyone find out at the same time?  Obviously if you have advanced notice of news like that, and you act on it, it's still insider trading -- even if the news becomes public later.

For sure, if they acted before the program details were announced it's insider trading. But a lot of hedge funds acted on the publicly available information too.

[Indexer]

Unless you’re playing in areas the insiders aren’t

Where are you playing then?

Every corporation has insiders.

[neil]

I agree it happens, but you also assume you can do anything intelligent with the information.  Unsuccessful insider trading is ignored and I would bet through survivorship bias that there's no way to track how many people wiped themselves out trying to be smart.  Even if you didn't trade based on information at the time, you still would have been far more familiar with the content than the average person, and that is going to have some value that you can't exactly erase when you make information public.

I don't recall the timing of any of this, but here's some guess:

https://web.archive.org/web/20081014104407/http://finance.yahoo.com/ - bailout! we are saved!
https://web.archive.org/web/20090306024224/http://finance.yahoo.com/ - d'oh!

What was the magic information that was clear to insiders, anyway?  If there's data that says they outperformed the crisis period, they should be able to summarize successful activity and make some educated guesses on the actionable information that led to those actions.  It's all public now, right?

I'd also like to know what those outperformers did after the crisis period.  I can imagine being at ground zero of this and think the market is fucked up and stay out of it, once banking your unusually high profits.

[hodedofome]

Unless you’re playing in areas the insiders aren’t

Where are you playing then?

Every corporation has insiders.

Derivatives, indexes, having a longer timeframe than computers/traders/insiders, stocks that have few followers. Those are a few ideas.