We all know how Martha Stewart was thrown in the clink.
We all remember the Enron implosion and scandal, with the former president of the company Jeffrey Skilling getting 24 years in jail (though 10 were shaved off) and a $40 million fine.
Raj Rajaratnam, Steven A. Cohen, Ivan Boesky… the list goes on and on.
All convicted of insider trading and paraded around by the government with “perp walks” and interviews assuring America that insider trading will not be tolerated and the markets will be kept fair.
It’s all a show, though. We all know it. The markets are not fair and never will be.
It’s just tough to see exactly how and to figure out the people that we should be watching.
You’ve probably never heard the name Jochen Zeitz. He’s the CEO of Harley-Davidson.
Back in August 2020, Zeitz picked up $2 million in his company’s stock, boosting his holdings by nearly half.
Four months later he was up an easy 35%.
How about Tal Zaks? He was Chief Medical Officer of Moderna. Three days before the company announced that its COVID-19 vaccine was good to go for human testing, Zaks started selling 10,000 shares a week for 10 weeks.
Over that two-and-a-half-month period he raked in $3.4 million as Moderna’s share price more than doubled.
Shareholders sued board members at CBS for unloading shares shortly before sexual harassment investigations into CEO Les Moonves became public.
An executive at Boeing sold $5 million of stock after managers were reportedly told that a software problem was probably at fault for a crashed plane. That information didn’t come out until a second crash happened about five months later.
All of this is legal, though kind of hazy, and none of these people have been convicted of any crimes, let alone charged.
And I’m willing to bet you know none of them, or the details of what they did.
At the heart of the legality of these trades are 10b5-1 plans, which is one way insiders disclose the trades they are making or going to schedule.
The thing is, it’s pretty easy to change these plans in short order as long as it doesn’t run afoul of any company policies.
Last year a paper from the Rock Center for Corporate Governance at Stanford revealed that executive insiders set up plans that start buying or selling shares within 60 days 39% of the time and within 30 days 14% of the time.
About half of all plans do not schedule and spread out purchases. Instead they are for a single large purchase or sale.
Executives aren’t locked in either. They can cancel and reschedule as often as they want.
The SEC, when it has filed insider trading charges, has not done so against anyone that has filed one of these plans in the last two decades.
The profit potential and potential for wealth protection are enormous for these insiders.
And there are a whole lot of them out there that none of us can name.
To be a corporate insider in the eyes of the U.S. government, you have to be a senior executive, board member, or shareholder with a 10% (or greater) stake in the company.
The numbers swirl around and are hard to track in real time, but about 80,000 of them are out there.
And each and every time they file a new plan, they have to disclose it to the SEC and the public.
These insiders, so hard to name and otherwise track, absolutely do not want you to know this.
After all, with the information that these forms contain, the public can track and replicate the outsized gains they consistently rake in.
Of course, the problem is there are 80,000 or so of them, and there are plenty of purchases and sales that are happening that are routine. Simply adding some more shares or trimming down to diversify holdings.
It takes expertise and a lot of time to sift through the information to find what we can use.
The Outsider Club‘s Alexander Boulden has been working on a new system to do this, and his readers will reap the rewards.
Just yesterday, he unveiled the details for his readers, and with how much money is on the line and how volatile the markets are today, it’s a perfect time to join them.
