HOBSON, Rodney

Shares made simple

Insider trading

…..
The evidence is that 24 % of target companies in 2005 saw their share price rise before they revealed that they had received an approach. The previous year had been even worse at 32 %, almost one third of all takeovers on the London stock Exchange.

Insider trading is perniciuous and the autorities here have been criticised for failing to attack it in the way that the US authorities tackle white collar crime. There has been just one successful case for market abuse brought in the UK in recent years.

However, it will be impossible to stamp the practice out entirely as long as greed is one of the seven deadly sins.

While this is a matter of concern, we need to get it in proportion. Unless you bought shares just before the approach was revealed, or intended to buy shares but were put off by the share price increase you have not been affected adversely

Only those who paid over the odds for heir shares or who missed out on a short term profit have cause to complain.

If you already held the shares, then you benefited from the share price increase.

Because companies are obliged to issue a public statement when there is a sharp movement in their share price, we are talking about a very short time frame, possibly just the first hour of trading when most private investors are inactive. Once the news is out in the open, the shares would rise anyway.

…..