SEC Asking For Real-Time Information to Detect Insider Trading

SEC is asking for real-time information to detect illegal insider trading. Here is why:

On August 12th, 13th, and 16th Juan Jose Fernandez Garcia, head of European Equity Derivatives at Banco Santander bought out of the money call options of Potash for $13669. On August 17th he sold his options for a profit of $576000. Do you think he was merely lucky? Banco Santander, employer of Mr. Garcia, was an advisor to BHP which made a tender offer to acquire Potash for a significant premium. More than 90% of the options bought by Garcia were due to expire on August 21st. Why would any buy call options with a strike proce of $130 and expires in a few days when the underlying stock is trading at less than $110?

Banco Santander, S.A. (ADR) (NYSE:SAN)

This is obviously an illegal insider trading case involving investment bankers. Garcia’s brokerage firm, Interactive Brokers, noticed the suspicious transactions and notified SEC. Interactive Brokers also bloked the transfer requests for most of the illegal profits. This is a successful enforcement by the brokerage company, not the SEC. Currently SEC does not have real-time access to market transactions by individuals.

Currently SEC has to make multiple requests to brokers to obtain transaction information about a specific security. Hey, no wonder they are slow in detecting illegal insider transactions perpetrated by securities professionals, lawyers, and accountants. SEC does not know which trades are suspicious because they don’t even see the trades. How do they investigate illegal insider trading then? If somebody complains or tips them about illegal transactions, then they start investigating the allegations. Maybe they just read WSJ or other financial websites to get ideas.

I am not going to delve into the discussion whether we should spend millions of dollars to set up a real time tracking system for the SEC. All I wanted to point at is SEC’s weakness in detecting illegal insider trading cases.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!