Thursday, March 31, 2011

Insider Trading for the Masses?

      Every day in the Wall Street Journal there seems to be another incidence of insider trading.  Just yesterday, March 30, 2011,  there was a story titled "FDA Chemist Charged as 'Insider'."  Cheng Yi Liang, an employee of the FDA, has had access to password protected information on major drug approvals.  Over the last decade, this has allowed him to profit 3.6 million from the stock market.  Liang was able to deceive his peers by using seven different brokerage accounts that were not in his name.  (For the full article, follow this link:  FDA Chemist Charged as 'Insider'. )
      Now you might be asking yourself, what does insider trading have to do with social media? Well, I connect the two with accessibility of information.  Reading Chapters 4 and 5 in Brian Solis's book Engage got me thinking about the amount of information available to consumers on the internet today.
         Consumers are now better informed than ever, and can make decisions based on company sponsored wikis, podcasts, blogs and consumer reviews. Social media helps eliminate the guessing game that used to be consumerism. You no longer have to be a top executive to receive inside scoop on  new product lines or upcoming mergers. The information can inexpensively become public knowledge.  Consumers can create dialogue with one another or directly with experts in the field.
         Companies have greater transparency and are leveling the field of knowledge among consumers, staff members and investors. I think it is neat that you no longer have to know the right people, or hold the right position to be fiscally or emotionally investedin a company.  My only concern is relevant to insider trading,  when is the amount of information available too much? Will there be companies be held accountable for the credibility of information shared on informal media channels such as podcasts, blogs or other social media sites? Will it become more difficult to prove insider trading with more information publicly available?

         I leave you all with this question: Do you foresee the vast accessibility of information to be entirely good, or are there looming dangers involved?  These are all things I am looking forward to seeing play out in the future, and I am looking forward to hearing your feedback as well.

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