SEC Investigates Another Insider Trading Scheme

Seems like there’s been lots of news about insider trading lately huh? Well, this time the accusations are directed at a Hong Kong couple who bought about 15 million dollars worth of Dow Jones Inc. stock about two weeks before a big announcement that Rupert Murdoch’s giant company News Corp. had made a bid to purchase the company.

Many times, when a huge company offers to buy a smaller one, or one of equal size, if the buy offer actually happens, then stockholders get a windfall of cash in dividends or increased stock value because the stock can double, triple, or even more of an increase in value due to the added assets of the buying company.

Insider trading is when someone has knowledge that is not supposed to be public, as is the case here, no one but the companies and certain priveledged “insiders” is supposed to know about this offer, and uses it to their financial gain advantage by buying the stock before the knowledge goes public and anyone can take advantage of it. It’s illegal, and it can land you in a lot of hot water with the governing arm that is responsible for policing the Securities market, the SEC, or Securities Exchange Commission.

The Hong Kong couple could be looking at jail time if convicted, and of course now a lot of that money they allegedly aquired illegally may be used on high priced attorney fees, especially since a lawyer who wants to take on a case this big will have some very big fees. I always wonder in cases like this, who actually leaked the information?