Tuesday, 2 July 2013

Wall Street Oasis - Investment Banking & Finance Community: Why Do Outside Investors Flee From Insider Trading?

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Wall Street Oasis - Investment Banking & Finance Community
The Wall Street Finance Community where investment bankers, consultants, traders, private equity and hedge fund professionals come to learn and play.
Why Do Outside Investors Flee From Insider Trading?
Jul 3rd 2013, 03:36, by Hooked on LEAPS

insider trading.png

If I heard one of the funds I was invested in may be involved in insider trading, I would view at as an opportunity to make a profit off something illegal, while someone else is taking all the legal risk. I kind of thought this was the definition of alpha. Worst case scenario the government shuts them down and outside funds need to be returned to investors.

I can think of only two explanations for outside investors fleeing:

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