At least once per year, it is healthy for all of us to take a moment and reflect upon the fact that corporate executives are quite plainly using their insider status to make unfair profits on their company's stock, while you, the average unconnected jerk, remain poor. Today is that day.
The Wall Street Journal today does us all the favor of taking its periodic look at stock trading by corporate insiders— not just those selling their own company's stock, but those who are selling their stock at a great price just before some bad news breaks that sends the stock price downwards. Such amazing timing, coincidentally, by these corporate insiders! I guess that's why they get paid the big bucks. Let's go to the numbers:
A Wall Street Journal examination of earnings-guidance data compiled by research firm Earnings Whispers identified 1,468 cases since 2005 in which public companies issued so-called upward guidance—saying results looked better than expected—then followed with downward guidance within 120 days. Securities and Exchange Commission filings show that in 755 of those cases, corporate insiders sold in the window between the up and down, an advantageous time to sell...
Among the 2,389 corporate officers who sold between swings in guidance, about 74% would have collected less money had they waited to sell until after guidance was lowered, according to the Journal analysis.
We're not saying that all of those 74% of sales are shady. We're just saying, if you locked up all of those corporate officers, you'd probably have at least as high a rate of justice as we have in prosecuting, say, drug crimes, so why not give it a try?