Insider Trading Activities

Requirements Clarification & Assessment

1. Understanding Insider Trading

   • Definition: Insider trading involves buying or selling a publicly-traded company's stock by someone with access to non-public, material information.
   • Types of Insider Trading:
     • Legal: Insiders trading on their own company’s stock but reporting it to regulatory bodies.
     • Illegal: Trading based on confidential information not available to the public.

2. Objective

   • Develop a method to detect potential insider trading activities using available datasets.

3. Data Requirements

   • Insider Trading Data: Regulatory filings (e.g., SEC Form 4) detailing trades by insiders.
   • Market Data: Historical stock prices, trading volumes, and timestamps.
   • Corporate Event Data: Dates and details of earnings releases, mergers, acquisitions, and other significant events.
   • Public News and Information: News releases and public announcements.

4. Key Indicators of Insider Trading

   • Unusual trading volumes or stock price movements before major announcements.
   • Patterns of trades by insiders just before significant price changes.

5. Constraints

   • Access to accurate and comprehensive data.
   • Legal and ethical considerations in analyzing insider trading activities.