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How TigerSoft Flags Savvy Insider Buying We at TigerSoft are privy to no insider tips or secrets. But over the years, we have learned how to spot savvy insider trading that is about to send the stock up and up and up! This pattern of buying repeats over and over again, year after year, in all markets, because someone on the inside knows something very good will happen to a company in the not too distant future. They know this with a certainty that is reflected in their manner of buying. The Three Key Stages To Watch for First, they quietly accumulate all the shares they can. A weak general market environment makes this a relatively easy pursuit. See the tell-tale bulges in the TigerAoft Accumulation Index in the chart below. When no more shares are available this way, they become more aggressive, because they know there is a very high probability that the stock will be much higher in six months or a year. We spot this stage technically, using our Accumulation Index, price patterns, volume and the automatic Buy signals which we have back-tested for the this purpose over more than 30 years of time with thousands of stocks' charts. Finally, because the stock is tightly held and the insiders have been quite shrewd, prices rise very sharply on high (red) volume, as more and more professionals and a handful of public speculators jump aboard. If you look closely, you can see all this in the DDRX chart below. In particular, see how our TigerSoft Accumulation Index spots the earlier periods of insider accumulation by rising above the +.5 threshold. The indicator varies from -1.0 to +1.0. It is quite bullish that there were three periods when it rose above +.50. A lot of stock was accumulated. The many automatic Buys are our alerts to buy the stock. The rising prices show us we were quite right; this was very savvy insider buying. Who were the insiders here? Sometimes, you can tell by looking at the official inside trading records that corporate insiders must report to the SEC. More often, there is no easy way to know. But make no mistake about it, someone on the inside knew. That's why the trading patterns matched so exactly the model we have constructed to spot savvy insider buying. . ![]()
Wall Street's 'Dirty Little Secret' INSIDER TRADING IS RAMPANT! I have been writing for two years about how the SEC is worse than useless and toothless, because it still gives the least informed members of the public the dangerous illusion that there is a governmental agency effectively policing and preventing investment fraud and insider trading. There is so much proof of how rampant is insider trading that one hardly knows where to begin to discuss it. And, with each new day more examples emerge, along with governmental officals decrying the state of affairs. The US law itself seems clear. While corporate insiders, key employees, directors and officials may buy or sell their company's shares, they must not do so based on material non-public information about their company and when they do make a trade, they must report it to the SEC, which then allows the public to see what they are up to. If insiders do make trades based on non-public information, the trades are considered fraudulent and the insiders are judged to have violated their fiduciary responsibilities. In addition, trades made by insiders tips to friends and associates are illegal. Again, the insider's duty to public shareholders is considered to have been violated by such tips. Stock brokers, analysts and journalists who in the course of their duties, discover and then trade upon non-public information that materially affects a company's stock also break the law, if they "had reason the believe that the tipper had breached a fiduciary duty in disclosing information" Federal Court decisions have further clarified what the law considers insider trading. The SEC v. Texas Gulf Sulfur (1966) is the most important case in setting the law. TGS found an unusually rich depost of ores near Timmins, Ontario. Initially, the company issued discouraging press releases about the discovery, all the while several directors for the company loaded up on call options nd stock. The press releases were meant to dupe the Canadian farmers into selling or leasing their land at a fraction of its probable values. The 1934 Securities and Exchange Act gives the SEC the authority to demand that violators give up their trading profits. They may also ask a court to impose a penalty of up to 3 times the profit realized by their insider trading. The sane law gives the US Justice Department the authority to bring criminal prosecutions against inside traders. In 2002, an inside trader could be given a 20-year jail sentence and be fined up to $5 million. In practice, criminal penalties are rarely sought, except in a few high profile cases. As a consequence, such penalties act as very little deterrent. Unfortunately for investors, the SEC acquired a reputation between 2000 and 2008 of being all but toothless. Too often they decided, while the trading may have looked suspicious, it would been too hard or too politically imconvenient to prove that the insider trading was done because of illegal use of non-public information. The weaker the SEC's enforcement looked, the bigger the problem became. In August 2006, the NY Times ran a lead story on page 1 that Wall Street insider trading had "gone wild". "41% of all mergers worth $1 billion or more over the last 12 months show signs of insider trading ahead of the deals." On October 26, 2007, the NY Post quoted a senior SEC official as saying that insider trading was "rampant" among Wall Street professionals. "I am disappointed in the number of cases we are seeing by people who make an abundant livelihood in the market..." In another example, a 5/18/2008 GA0 (Government Accounting) report on the SEC wrote: "In one case, an enforcement attorney told the GAO that a company offered to pay $1 million to settle a case, but the attorney recommended no penalty because "they did not believe the commission would approve the company offer." See - http://www.star-telegram.com/business/v-print/story/1380769.html John Mack, the CEO of investment bank, Morgan Stanley is apparently above the law. Gary Aguirre, a former SEC investigator, told a Congressional committee that he was fired when he tried to interview Mack about tipping off the hedge fund Pequot Capital Management about a 2001 merger deal between GE Capital and Heller Financial. Pequot netted $18 million in profits from the tips. A Congrsssional Investigation was launched. It ended up siding with Aguierre against his bosses at the SEC In July 2009, the Seattle Times noted that the SEC typically goes after the small fries for insider trading, while well placed insiders and institutions often get off without even a warning. Insider trading, the articles concludes is rampant. Even former SEC Chairman Cox admitted this: "There is ample empirical evidence that there is significant trading in securities markets on the basis of secret advance knowledge". Flagrantly Illegal insider Trading is rampant and commonplace. This is the inescapable conclusion we reach looking at all the evidence. The SEC exists mostly to give the appearance of fairness for all investors on Wall Street. Insiders sell out on when false, exaggerated and distorted "good news" comes out that they know will soon turn bad. Earnings and earnings' estimates cannot be safely trusted. After-the-fact discoveries of "Cooked Books" and CEO Lies and cover-ups are very common. Since 2001, the SEC has prosecuted about 50 cases of insider trading per year. That is not nearly enough to stem the tide. Insiders who use a modicum of discretion have no fear, especially if their gains are not out of the ordinary. The SEC picks a minute number of high profile individuals to prosecute for insider trading. This is for show! 99.9% of the other cases where big gains are made flagrantly using insider trading are ignored. The prosecution of a very few well known people is done for public consumption, to make it seem that the SEC is protecting the public. This was mainly true in the Clinton Administration, too. Certainly, the SEC rarely goes after the biggest investment banks, where so much of the insider trading takes place. Look at the steadily red negative readings from the TigerSoft Accumulation Index, for example, in Citigroup. These were insiders and their friends selling out. Even using the official records, insiders sold 1 millon shares in 2007 at or near the top! See Tiger Blog 11/25/2008 RECKLESS CITIGROUP INSIDERS SOLD 1,000,000 SHARES IN 2007. Now taxpayers are bailing out the company with more than $45 billion. Why does the SEC not go after insiders like these? Why not Kellinger (Washington Mutual) or Rubin or Prince (Citigroup)? Just below is the WM chart I put on our Blog for 12/28/2007, nine months before I warned it might go bankrupt, based on how extensive the insider selling was. The TigerSoft chart shows you exactly what to look for. ![]() See also - SEC charges Mark Cuban with insider trading... He is the best known figure to be accused by the SEC since its 2002 case against Martha Stewart. - Sacramento News ... - The Undercurrent | insider trading (April 6, 2008) - A Financial History of Modern U.S. Corporate Scandals: Since Enron - Insiders circumvent insider trading regulations... Insider selling is rampant and goes unpoliced. The evidence is in the TigerSoft charts. "Someone always knows", we say. Use the TigerSoft charts to see if insiders are buying or selling and you will do very well in the stock market. The Scandals of ImClone, Enron, Arthur Andersen, Health South, Homestore.com, K-Mart, Martha Stewart, Merrill Lynch, Qwest, Jack Grubman of Smith Barney, Tyco, US Technologies and WorldComm are the tips of the ice berg. They have just whetted the appetites of a new generation of Corporate CEOs, Presidents and Board Members. Some history, lest we forget.
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InsiderTrading Studies by
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