Australia has been captivated by the trial of two young men put before the court on a charge of "insider trading ". It opens the door to the world of secrets that we ordinary mortals can not access, but which are capable of delivering incredible rewards for those bold enough to take the risk.
A friendship from their schooldays continued as they commenced their commercial life with one young man securing employment in a commercial banking firm. The nature of his work was confidential because he was aware of merger and acquisition moves as financing arrangements were being put in place. From that it was possible to deduce what moves would occur with stock market prices when these plans proceeded to public announcements.
It seems he "leaked "this information to his friend, who made investments accordingly. In some instances he made as much as a hundred thousand dollars profit a day and readily confessed in court that it was "the easiest money they could possibly make "!
It became a game and they egged each other on - and the rewards were spent on a lifestyle worthy of the rich and famous. Travel - entertainment -holidays - and a penthouse that would overlook the best views in Sydney. Of course this rich lifestyle caught the eye of regulators and eventually they came undone.
The man who betrayed his firms secrecy received a three year prison sentence, with fifteen months to be served before parole and this constituted a ten percent discount because he agreed to give evidence against his co-accused.
All up this insider trading delivered a profit of $5.8 million and only $ 1.59 million has been recovered by the authorities. That is a point that will not be lost on those in a position to profit from the use of commercial information, even if so doing is against the law and could result in a prison sentence.
It is also evident that these two young men were unwise to engage in such an extravagant lifestyle which would draw attention to how their wealth was being accumulated. We are accustomed to unexplained price bubbles in stock prices that seem to occur from time to time and it is quite possible that some of these may be attributed to "insider trading" by more discreet operatives.
The commercial world involves an amazing number of people who of necessity must play a part when a major move is planned. When a titan of industry plans an acquisition the ramifications will be explored by the minions of one of the firms described as a "consultancy " and the method of finance will certainly be discussed with one or more merchant bankers. Low key workers required to collate the information needed will quickly gain a clue of the likely outcome by the nature of the information they process. The pool of knowledge is ever widening.
This case before the courts was opportunistic - and blatant. It is also a crime that is lightly punished in relation to the rewards gained. In this age of low interest rates, those with valuable knowledge must be tempted to try their luck !
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