An award-winning new study claims that more than a quarter of all public company deals involve transactions that could be consider examples of insider trading.<\/p>\n
The recently published report from Menachem Brenner and Marti G. Subrahmanyam at New York University and Patrick Augustin of McGill examined years of data concerning mergers and acquisitions, or M&As, to spot unusual trends in the 30 days preceding those announcement. According to their research, around one-in-four deals contained evidence of insider trading.<\/p>\n
\u201cWe became intrigued by reports of a number of illegal insider trading cases in options ahead of takeover announcements, in particular the leveraged buyout of Heinz by Warren Buffet and 3G Capital<\/em>,\u201d co-author Augustin said in a\u00a0statement<\/a>. \u201cHence, we set out to investigate whether instances of informed trading in options occur systematically or whether they were just random bets<\/em>.\u201d<\/p>\n \u201cThe statistical evidence we present is consistent with informed trading strategies, and is too strong to be dismissed as just random speculation. Our findings likely will be highly useful to regulators, firms and investors in understanding where and how informed investors trade<\/em>,\u201d Augustin added.<\/p>\n