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Well, since this get downvoted, and I cannot edit my post - here is more meat. The case I'm thinking about is the case of http://en.wikipedia.org/wiki/Karel_De_Gucht Not saying that it is not illegal, but insider trading and even the definition itself is a huge gray area ( like when you talk to a friend at the pub about the new cool project you are working on, you are giving privileged information ) So although insider trading legislation are good, in practice they have less teeth than they should. When investing, it is a safer approach to assume others have privilege information. Even in the case you have insider information, that is also better to assume others have better one, hence the GP advice to stay away from the peny stock even when you know someone. Here is the interesting bit about De Gucht. ( He could be saying the truth or not, that's not my point, but under strict insider trading regulation this coincidence would not have passed ) "On 3 October 2008, his wife, Mireille Schreurs, and brother-in-law sold their shares in Fortis Bank after a governmental crisis meeting to deal with the precarious financial situation of the bank, hours before the public announcement that the Dutch arm of the bank would be nationalised and the partly nationalised Belgian and Luxembourg branches sold to BNP Paribas.[7] An anonymous complaint was received by the Belgian Banking, Finance and Insurance Commission alleging De Gucht's wife sold €500,000 worth of Fortis shares.[8] De Gucht acknowledges that his wife and brother-in-law sold their mother's shares in Fortis Bank on the date in question for a smaller amount than alleged, but they deny that any insider trading was involved. He also points out that he personally lost €85,000 as a result of the nationalisation and sale, and that his son, Jean-Jacques De Gucht, and mother kept their shares in the failing bank." |