November 2012

Insider trading: Should investors beware?

Probably the number one criticism of the stock market.

It is tough for a shareholder when a firm is not transparent. Insider trading is what a lot of investors complain about and the main reason why investors shy away from the stock market and other security markets. I am here to tell you that insider trading is in fact good for investors despite its obvious cons.

The Nobel laureate economist Milton Friedman along with other big-name economists have argued that insider trading serves to make information efficient in the markets. After all, investors are capitalizing on the stock picks of insiders for impressive results. It has come to pass that when a CEO buys a stock that stock will appreciate and outperform the market as a whole.

The Vikram Pandit resignation: The truth

Pandit was blindsided.

One of the big news events coming out of banking and finance was the resignation of the academic hedge fund guy Vikram Pandit who was leading a global consumer bank. Transparency and openness to shareholders is something that Wall Street firms are not accused of. The Vikram Pandit 'resignation' just goes to show how the truth is kept from the public. The good thing is that it has actually come out on in this case.

There have been conflicting reports about the reason behind Pandit's departure and why it came about now. But there is no denying the fact that Citi's troubles existed long before Pandit came to the firm. Some of Pandit's moves did not bode well for Citi with him not listening to head of wealth management at the time Sallie Krawcheck being a prime example.