In the modern world, an insider is a very common concept. It is applicable in various fields of economic activity. In a general sense, an insider is an individual or legal entity that, thanks to its position, has access to valuable (mainly, of course, from an economic point of view) information.
Term
An insider (from the English “inside”) is a member of a group of persons who have any important information. And he is actively acting - for the most part for his own benefit. In the media , this word has become synonymous with the concept of "source in ...".
An example of altruism insider trading is the American intelligence officer Edward Snowden, who revealed to the world secret information belonging to the US National Security Agency. But, as a rule, such persons in a certain group possess not only knowledge, but also sufficient power and means, and use their position only to acquire additional benefits. In contrast, external specialists of the company can only analyze the information received, not having an idea of how reliable they are.
Another striking example of already self-serving activity is the famous Wall Street scandal associated with the names of Michael Milken, Ivan Bosky, Martin Siegel and Denis Levine. It all ended in real terms and huge fines. This can be found in the book by James Stuart, entitled "The greed and glory of Wall Street." Feature films are still being made about the speculations of American moneybags.
Insider Information
Often this concept is associated with industrial espionage and superprofits of large corporations. Meanwhile, as in any organization, so in a political party there are areas that are closed from outside access. This is classified information not intended for ordinary citizens - the latest technologies, advanced developments, financial reports, lobbying for the interests of certain groups. And since real people are involved in all these processes, they are insiders who can deal with this information. No wonder Francis Bacon said that knowledge is power. And in the modern world, such individuals are becoming serious weapons to achieve benefits, both political and economic. And insider activities can undermine the work of a large corporation and break the career of a major public figure. And although the term itself initially did not have a negative component, more and more often insider trading is associated with personal self-interest.
Because of the above, it is clear that the attitude of ordinary people to this phenomenon is mostly negative. This is confirmed by various theories of a worldwide conspiracy. For example, rumors about the existence of the Illuminati group. An insider of this secret society allegedly reported that the upper worlds had decided to reduce the world’s population by ninety-nine percent. One of the methods they have chosen is products made using GMOs. The latter, it is claimed, dramatically reduces the ability of the human reproductive system. Films are also being made on this subject.
Right
Members of criminal gangs or corporations that violate the law may create “leaks” leading to the disclosure of such acts. For a specific purpose, of course.
Finance
Often insiders - shareholders or board members of large corporations - use the information they have about the position of the issuing company for transactions in the securities market. Such operations are not always legal.
Policy
In ordinary life, insider information is information (public life, economics, ecology, etc.) that contradicts the authorities' point of view and is reliable at the same time. Sources in this case can be both politicians and scientists, journalists, and cultural figures.
Business
An insider is a major shareholder, as well as a senior manager of the corporation. All of them have important information about the state of the company.
Banking sector
A bank insider is an individual or legal entity that is aware of the financial situation due to its official position. Shareholders and their relatives may also have such information. Here it is necessary to clarify who are “physical” and who are “legal” insiders.
The first category includes:
- Persons owning shares in the bank, shareholders.
- Top management: from the chairman of the board of directors to the chief accountant.
- Heads of structural divisions, as well as persons who, by proxy of the auctioneer, have the right to vote at meetings.
- Auditors, auditors and representatives of regulatory bodies.
- Relatives of all the above persons.
- Associates of institutions associated with the bank.
The second category includes:
- Participants and institutions that hold significant capital shares in the bank; as well as enterprises, significant parts of which are owned by the latter.
- Organizations whose leaders are close relatives of shareholders, senior managers and supervisors of a credit institution.
How to protect yourself from insider trading
Commercial and other organizations are taking steps to maintain classified information. There are both legislative and hardware tools for this. Among the latter, special computer programs, such as the Insider, which “hide” electronic data, should be noted.
Important documents are stored in designated places under the guise of other information, such as graphic files. And for the layman, this data on the computer is generally not there. And only when you enter the correct password do the necessary folders become available. True, the files that the program can delete can no longer be restored, and the application itself uses the Internet. So there is a risk of disseminating information on the World Wide Web.
What can the Insider program do?
- Data encryption.
- Hiding confidential information.
- Unlimited size of processed data.
- Exchange data using the Internet.
- Permanent file deletion.
Other standard programs are used to protect confidential information: antiviruses and authentication systems. In general, any self-respecting organization must have a security policy.
Legal methods to combat the dissemination of classified information include the Insider Information Act. Many amendments have already been issued to him. This normative legal act defines the list of persons related to insiders, as well as cases when an individual or legal entity can acquire such a status.
According to the law, using insider information to manipulate stock prices and personal enrichment is illegal. This is because it impedes competition in the financial market.
List of insiders - what is it? The law requires organizations to compile a list of employees who are granted access to classified data. Persons may also have insider information due to their position. The ability to work with secret documents and the responsibility for this is stipulated by labor and civil law contracts.
There are so-called "primary insiders." These are persons who directly receive secret data. In addition to them, there are also "secondary" ones. They have access to insider information through the former.
Insider Information
Such information, in principle, is accessible to everyone. They are necessary for making decisions about whether to buy or sell shares. In such cases, it is important to remember the following. Most of the transactions that insiders make are designed for the growth of their companies in the future. Therefore, a serious and thorough analysis should be carried out. And the sale by one of the major directors of an insignificant part of its shares should not be misleading. You need to act only when several shareholders begin to get rid of securities. And the director, not only receiving a salary in the company, but having his own assets in it, is a much more indicative object for analysis.
Information on such transactions can be found on many specialized sites, which even have insider sections. They always have something interesting. However, one or another site may be controlled by an insider. Reviews on such resources should therefore be read very carefully.
This article, of course, does not pretend to reveal the whole topic. There are many nuances in insider trading. Everyone understands that there is little good in it for ordinary people, but in modern conditions of a market economy, this phenomenon must be treated as a fact.