ASX insider trading 'rife'
A new report has slammed company directors for insider trading on the Australian Securities Exchange (ASX).
Research led ANU College of Business and Economics senior lecturer Dean Katselas has found industry trading is ‘rife’ among Australian company directors.
The study looked at trades made by company directors after both good and bad news announcements across 10 years between 2005 and 2015.
It found that directors traded against the sentiment of the news - selling shares when news was good and snapping up shares after bad news.
“My results show these contrary trades were being made with non-public knowledge, privy only to company insiders, about the future performance of the firm,” said Prof Katselas.
“This most certainly amounts to insider trading under the law.”
He said the trading was the “exact opposite” of what would be expected after either good or bad news.
“If the news had the potential to boost the share price, I found the directors were selling their shares, when normally, this is the time you’d expect them to be buying.
“In the safe knowledge of what’s coming in the future for their firms, these company directors and many of their associates, are confidently trading in the opposite direction, which ultimately helps tip the share price back again.
“There hasn’t been a single individual or company identified as breaking the law by trading in this fashion to my knowledge because it’s generally accepted that the information is public.”