Tag Archives: insider trading

FSA REPORTS: “abnormal pre-announcement price movements” in 21.2% of 2010 UK deals

19 Jun

Via Bloomberg:

“Unusual share price movements in the two days before takeovers announced by U.K. companies last year fell 9.4 percent, in a sign that insider trading may be decreasing.

There were ‘abnormal pre-announcement price movements’ before 21.2 percent of the 118 deal notices in the U.K. in 2010, the Financial Services Authority said in its annual report, published yesterday. That was down from 30.6 percent in 2009, and the lowest rate since 2003.

Factors other than insider trading, such as speculation by analysts or the press about an upcoming deal, or information leaks, could be the cause of the share price movements, the regulator said. The FSA has made market abuse and insider trading by top bankers a focus of its enforcement efforts.”

The SEC is weak by almost every barometer

9 Apr

The SEC mandate is to provide a fair trading environment; a quick look at the options market immediately prior to Buffet’s Lubrizol purchase indicated heavy open interest even before any newswires reported the takeover agreement. The option interest was uncharacteristic and stretched compared to historic performance. Purchases of open calls were amplified and the fact that this has not been investigated is disgusting. The SEC is clearly behind the curve; it has not even registered with them. The laissez faire approach of the SEC undermines confidence in the ability of regulators to enforce, even if superficially.

The Government don’t understand risk, profit and complex interplays.  Even after the crisis, governments worldwide encouraged financial institutions to hold more liquid tier 1 capital, and this was something that was considered to be essential. However, they specifically encouraged government paper including sovereign debt as they implied a government guarantee and these debt instruments were also heralded by the ratings agencies. It’s not the government’s job to advise financial institutions as to how they should specifically allocate their capital. Capital allocations should be weighted towards gold, silver, cash, foreign currencies, stocks, direct investments, commodities and materials. Purchasing government bonds in countries which have significant deficit imbalances should be avoided. The constant search for yield in bonds should be avoided, as they have weakened and have lost real value. There is also significant principal risk given the current inflation trajectory.

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