No surprise here. A detailed new study out of the Stern Business School and McGill University, examining hundreds of stock option transactions from 1996 through the end of 2012 finds that 25% of all public deals may involve some kind of insider trading:
The professors examined stock option movements — when an investor buys an option to acquire a stock in the future at a set price — as a way of determining whether unusual activity took place in the 30 days before a deal’s announcement.
The results are persuasive and disturbing, suggesting that law enforcement is woefully behind — or perhaps is so overwhelmed that it simply looks for the most egregious examples of insider trading, or for prominent targets who can attract headlines.
The professors are so confident in their findings of pervasive insider trading that they determined statistically that the odds of the trading “arising out of chance” were “about three in a trillion.” (It’s easier, in other words, to hit the lottery.)
Meanwhile the financial firm directed SEC, the study notes, only litigated “about 4.7 percent of the 1,859 M.&A. deals included in our sample.” See: Study asserts startling numbers of insider trading rogues.