Former Qwest CEO Joseph Nacchio faced the wrong side of the law when he was convicted of insider trading and sentenced to six years in prison. However, Nacchio may soon find his sentence reduced due to his recent victory in a federal appeals court, in which the convicted executive successfully argued that there was a miscalculation.
 
In the ruling, the Denver-based appeals court found that the trial judge miscalculated Nacchio’s earnings from the illegal sales of his stock, which may have extended Nacchio’s sentence by several years. While the trial judge found Nacchio’s earnings to top $44.6 million, Nacchio argued that …read more

When deciding to buy or sell stock, should you follow the insiders?
I have heard the term “follow the insiders” used in two contexts: following their transactions (buying or selling) or following their job moves (i.e. leave the stock when they leave the company).
Today, I’ll examine following the transactions of the insiders. The logic is pretty basic. If insiders are buying shares of the company, then they believe the stock is undervalued. Perhaps there is something positive in the pipeline.
If insiders are selling shares of the company, then they believe the stock is overvalued and want to take their profits.
Makes sense, right? After all, …read more

Insider trading is illegal, but is it really that bad?
The line between informed trading and insider trading is drawn by examining the type of information which prompted a person to act. Someone who has material nonpublic information is an insider.
For example, former Countrywide CEO Angelo Mozilo was recently accused of insider trading.
As a chief executive, he had easy access to inside information. In addition to running the company, he was a shareholder with a large ownership stake in the business.
Given his intimate knowledge of Countrywide’s business, is it reasonable to expect that he would ignore inside information that could impact his own wealth?
Insiders have an …read more

The Securities and Exchange Commission today charged a former portfolio manager at hedge fund investment adviser Millennium Partners L.P. and a salesman at Deutsche Bank Securities Inc. in the first insider trading case involving credit default swaps (CDS).
With the help of the U.K.’s Financial Services Authority, the SEC investigated Renato Negrin and Jon-Paul Rorech, who they now charge with collaborating in a scheme to profit from changes to a proposed bond offering of VNU,  an international holding company that owns Nielsen Media and other media businesses.
According to the SEC’s complaint, Rorech illegally tipped Negrin about the contemplated change to the bond structure, and …read more

Mark Cuban fired back at the SEC, defending the sale of stock which has him facing charges of insider trading. 
Initial reports said the charges stemmed from his involvement in the IPO of a search engine called Mamma.com, but the sale in question was actually from a private investment in a public entity, also known as a PIPE. 
What is a PIPE?  Well, a PIPE differs from an IPO in a few ways.  An IPO is the first offering of securities to the general public.  PIPEs usually take place after a company has gone public and new securities are usually marketed to venture capitalists (instead of the general public).  Some …read more

One Maverick may be in some serious trouble!
The SEC has charged Dallas Mavericks owner, Mark Cuban, with insider trading.  The charges stem from Mr. Cuban’s involvement in the initial public offering of a Montreal based firm, Mamma.com.
IPOs are typically marketed to individuals with access to large amounts of wealth.  The SEC alleges that the Mamma.com IPO made its way to Mark Cuban in 2004 and he was offered the opportunity to buy the stock after he agreed to keep the information to himself.
According to AP reports, the Mavericks owner found out that his shares would be sold below the market price.  He then instructed …read more