An inside job. Using a novel approach to examining the profits of insider transactions, School of Management Assistant Professor of Finance and Economics Leslie Jeng and colleagues from Harvard University and Harvard's JFK School of Government found that insiders profit handsomely when purchasing securities, but not at all when selling them. Their recent study examines 21 years of insider transactions, with a focus on top executives such as CEOs, board chairs, and presidents, who usually have the best information about their organizations.
American regulators are concerned with whether the playing field is level.
Despite the significant profits to insider purchases, the research team finds that outside investors have little to fear from losing to trading with these insiders. The researchers say their study show that current regulations sufficiently curtail excessive insider trading. Regulators should be reassured that the system appears to be working.