Sometimes I wonder what would happen if I could magically see into the future (like in the TV show about the guy who got tomorrow's newspaper) and trade stocks. Would the SEC notice and investigate if I kept making fantastically well-timed trades in numerous different stocks?
2007-06-28 12:32:50 · 6 answers · asked by rainfingers 4 in Business & Finance ➔ Investing
If you were making small plays (even plays that seemed large to you but in terms of the overall volume of the stock were small) its doubtful the SEC would notice.
If you were making large plays or you began to tell your friends and family and in the aggregate your plays reached a level where it was a noticeable part of the volume, then the SEC would likely inquire but only if your "magic power" related to stock changes in advance of the release of news (like a merger) ... if it were unrelated to the announcement of news but you just seemed to be able to predict random stock movements the SEC would be puzzled but I doubt if they'd pursue an investigation.
The way it works is that the SEC tracks stocks and when there are major announcements like when News Corp bid for Dow Jones they go back and see whether, prior to the announcement, a bunch of trading occurred ... they then track down who was making those trades and what their trading history has been. If the trading history is inconsistent (like someone who is a small investor suddenly makes a several hundred thousand or million dollar margin play the day before a big announcement) they will begin to track down that person and their background. Meanwhile, they have contacted both Dow Jones and News Corp. and under their regulatory authority they will ask for a list of every person who was aware of the transaction, a copy of the aforementioned persons' emails relating to the transaction and a list of every person that the aforementioned persons told about the email. They will then track down each persons' relatives, spouses, children and other people related to that person in the public record and cross check against the unusual trading activity.
If you can see the future, you have nothing to fear. You have not broken any laws. If you do have inside information, if you aren't too greedy you won't get caught by the SEC. Its up to you as to whether its the right thing to do.
----------------------------------
Search using www.yahoo.com/search
2007-06-28 13:49:25 · answer #1 · answered by Bronzebeardanswerer 4 · 0⤊ 0⤋
As long as you were not trading on inside information, it doesn't matter who notices. If you're not doing anything wrong, the SEC won't care.
The problem will be that others may notice and start doing what you're doing which will have an adverse affect on your decisions. You make money in the market when your decision goes against what the others thing. You sell because others want to buy and you buy because they want to sell. That's how you buy low and sell high. Your only hope will be to make small plays that won't affect the market at all and keep your mouth shut.
2007-06-28 16:32:01 · answer #2 · answered by mstr_spkr 2 · 1⤊ 0⤋
It depends. They noticed Martha Stewart. So much for the big fish/little fish theory the first responder proposed.
2007-06-28 13:05:05 · answer #3 · answered by Judy 7 · 1⤊ 0⤋
Only if you were a small fish. They allow the big ones to get away so that they can get even bigger. How do you think the hedge funds reap those big profits for the well healed investors?
2007-06-28 12:38:51 · answer #4 · answered by Anonymous · 1⤊ 1⤋
Of course.
That is their only job, if you think about it!
2007-06-28 12:47:37 · answer #5 · answered by Anonymous · 0⤊ 0⤋
No.
2007-06-28 16:20:20 · answer #6 · answered by Anonymous · 0⤊ 1⤋