By Greg Hazley
Insider trading has entered the age of the Facebook generation and become more complex and "socialized," according to a study to be published by New York-based Montieth & Co.
President Montieth Illingworth, a former financial reporter, said the forthcoming analysis of 76 insider trading cases since 2009 shows relationships between individuals charged, and their patterns of communication, appear to be a socialized networking model as evidenced by expert networks.
While social networking didn't cause those charged to engage in insider trading, Illingworth said the research shows the behavior was similar to that seen on social networks.
"Every generation commits crimes in its own, unique way and when you look at the people who engaged in insider trading today you can see that patterns of what we term intra-social networking," he said. "This is insider trading in the age of the 'Facebook Generation.'"
The study analyzes the 76 cases brought since the appointment of U.S. attorney for the Southern District of New York Preet Bharara, including the large cases involving Galleon and individuals connected to SAC Capital.
Illingworth, who is developing a social-based compliance solution with digital firm EchoDitto, noted that while the insider cases of the 1980s were focused on investment banks, the study showed 11 different types of organizes involved in the recent cases -- hedge funds, banks, corporations, and expert networkings, among other entities.
Illingworth said the 1980s cases were driven by individual "masterminds" while the recent insider trading cases show a greater level of complexity involving numbers of people across multiple corporate affiliations.
He said social networking tools can be used to educate employees and the business partners they ineract with to avoid running afoul of securities laws. |