Insider trading and its faceless victims
Devanasan Evanson | 10 May 2019 00:30
They say insider trading is easy to commit without a guilty conscience, (and easy to rationalise its commission), because it is a crime with a faceless victim.
You buy from the market (based on inside information) through your broker and the shares you are buying are from an investor who sells through his broker. The buyer does not know the identity of the seller. The buyer’s immediate counter party is his broker.
In fact, the buyer does not even know the identity of the selling broker. (One can also sell shares based on inside information to avoid a loss).
Here, there are two levels of intermediation between the buyer and the seller - their respective brokers. Sometimes, it can occur that both the buyer and seller may have the same broker. Even then, you never know the identity of the seller.
And hence the faceless victim - the seller.
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