University of Otago researchers Dr David Lont and Kate McCune have received international recognition for their work investigating insider share trading in the United States.
Together with Professor Paul Griffin of the University of California, the pair performed an eight-year study examining the buying and selling patterns of stock within companies that faced bankruptcy. It was found that almost US$2 billion (NZ$2.7 billion) was generated through insider trading during the study period.
Results revealed insider selling would increase just before the disclosure of violations for flailing companies. Insider buying would then recommence once a company had been refinanced through bank payouts.
Dr Lont told the Otago Daily Times that New Zealand could avoid issues of insider trading by making it a requirement for companies to reveal debt covenant violations and waivers when they occurred, and then imposing a block on insider trading whilst debt negotiations took place.
Insider Trading
