If you have a CEO or a person who is considered to be an insider sell...

If you have a CEO or a person who is considered to be an insider sell a large block of stock and he gets reported through the security and exchange commission, is that a sign that the company as well as the stop is headed for challenging times?

Expert Solution

Yes, its Sign that Company as well as the stop is headed for Challenging times.

In Layman terms, Insider means"A person within a group or organization, especially someone privy to information unavailable to others".

First of all, Insider trading is illegal.Illegal insider trading is the buying or selling of a security by insiders who possess material that is still not public.

And at the same time, It is legal too.Legal insider trading is when the insiders of the company trade shares but at the same time report the trade to the Securities and Exchanges Commission (SEC) with stipulated time .

Normally person sells the stock only when he feels that Company losses some heavy contracts or there exists any negative scenerio that impact the going concern in the future.

In the present case, there exist two situations.

1. If CEO not reported to SEC with in Stipulated time : It is illegal and it is the bad sign for company's future.

2. Selling Large Stock : Normally persons sells large stock only when they feels that company will not perform much in future.

By this we can say that, CEO who is a Insider and selling large number of stocks without reporting to SEC will sure be the cause for company as well as the stop is headed for challenging times.

jeff jeffy answered 3 weeks ago

a) What is considered insider trading? Multiple Choice All of the other statements describe insider trading....

a) What is considered insider trading? Multiple Choice All of the other statements describe insider trading. Marlene, an individual investor, buys shares in a company because her financial analysis of the company suggests that it is undervalued. Bill buys shares after the company's earnings announcement because he personally knows the auditor who audited the company's earnings announcement / press release. Chris, a hedge fund manager, purchases a 5% stake in a company because he wants to install his colleagues on...

1. Why is insider trading hard to define? 2. Why it insider trading considered harmful?

1. A person is considered medically to have lead poisoning if they have a concentration of...

1. A person is considered medically to have lead poisoning if they have a concentration of greater than 5.2 μg (micrograms) of lead per deciliter of blood. What is the concentration in parts per billion (ppb)? Assume 1 mL of blood weighs 1 g.

1. According to the Bureau of Labor Statistics, a person who is selfminusemployed is considered A.unemployed....

1. According to the Bureau of Labor Statistics, a person who is selfminusemployed is considered A.unemployed. B.employed. C.not in the labor force. D.a discouraged worker. 2. Employment protection laws make it ________ for firms to hire people, which can result in a(n) ________ in the number of people who are structurally unemployed. A.less risky; decrease B.more risky; increase C.less risky; increase D.more risky; decrease 3. The health care system in Canada is referred to as ________, and is a system...

How to explain what is Corporate responsibility and insider trading? If a person is over heard...

How to explain what is Corporate responsibility and insider trading? If a person is over heard talking about company plans in a public place by a competitor can the information be used by the person that heard the information legally or is that a form of insider trading? What is the corporate responsibly in this scenario?

What is the name of the person or person(s) that are considered the father of the...

What is the name of the person or person(s) that are considered the father of the health navigation profession?

If one person has both roles of ceo and chair what implication does that have?

Why is insider trading considered more unfair in some countries than in others? And what can...

Why is insider trading considered more unfair in some countries than in others? And what can be done to improve levels of ethics and fairness around the globe?

Used car market, we have sellers who only sell good cars and sellers who sell lemons....

Used car market, we have sellers who only sell good cars and sellers who sell lemons. Value Seller buyer Good car 1500 2000 Lemon 600 400 If you are a good car dealer and successfully sold a good car, what is the profit? Under symmetric information, will the lemon owner be able to make profits? Under asymmetric information, the only information buyers have is there are 50% bad cars and 50% lemons in the market. For a risk neutral buyer,...

Should TRU have considered the bid offered by Issac Larian of MGA Entertainment? If TRU's CEO,...

Should TRU have considered the bid offered by Issac Larian of MGA Entertainment? If TRU's CEO, Dave Brandon, is able to save TRU, where should his turnaround efforts be focused? What financial ratio(s) should he have improved and why?

Question