Are Corporate Executives Privvy To Stock Exchange Secrets?What might these stock exchange secrets be? In late (Sept-Oct) 2006 it began to appear as though company executives had found a new and secret method to make extra money from the companies that they manage. What is not legal is reporting them in the same way that any other option is reported. It appears that this mis-reporting has the potential to lead to convictions. There have already been a number of high profile resignations. In one company, it appears as though stock options were awarded to someone who is deceased. Whilst this may have made thousands or millions of dollars for the executives involved, this is not really a sure fire path for profits for an average investor. What this does highlight is the disconnect between the goals of managers and the goals of the owners. Whilst many managers will own company stock, it is likely to be a very small percentage of the whole. This means that nefarious actvities will damage the 'general' shareholding population more than a manager. Unfortunately, these appear to be risks that management are willing to take. There are of course many other problems with company management owning corporate stock. Even if they are not allowed to purchase for themselves or their family, there are always ways around this for a committed insider. Knowing how your firm is performing is vital information which may well influence a share price. However, the opposite (knowing how you are performing and what impact this is having upon your close competitors) also offers ways to gain for an executive. The modern world of spread betting has even made it possible to take a chance on a company share price without the need to own stock. Spread betting has also made it far easier to 'sell short' a position on a company and thus benefit if the news is bad. It is hard to imagine that there are corporate executives out there who have not played this game. In other words, it will always be possible for insiders to benefit from stock exchange secrets. To read more about stock exchanges, please visit:
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