Famous Insider Trading Cases

There are many insider cases every year filed by the SEC. Out of which two are famous insider trading cases. These are Ivan Boesky (1980) and the ImClone case (2000).

Ivan Boesky

Ivan Boesky was an arbitrageur. He nearly made around $200 million from company arbitrage and company take over activities. However, the investigation initiated by the SEC (Securities and Exchange Commission) is not for his general activities in the arbitrage and take over but for his investment which is allegedly derived from the inside information.

SEC has reason to believe that Mr. Ivan Boesky has bought large amount of stocks prior to the announcement of take over, which leads to high price increase of the company's stock.

In the end Boesky get three and half year of prison apart from the fine of $100 million.

Martha Stewart

Martha Stewart was a celebrity TV personality. SEC has initiated the investigation for the ImClone System. The stock of this company is freely traded in the exchange.

When this trial ended Martha Lynch along with the Samuel Waksal (SEO of ImClone System) and Peter Bacanovis (personal broker of Martha Stewart from Marrill Lynch) are prosecuted and send to Prison.

The case

SEC was skeptical about sudden drop in the price of the ImClone in December 2001 when company did not get the FDA approval of their drug Erbitux. SEC found in their investigation that several company executives have booked profit before the public announcement of the decision of FDA. This is a classic case of Insider trading. They sold their portfolio because of the information which only few posses.

Some people thought this case was in limelight because of the involvement of leading TV personality. She has sold her entire stack of $230, 000 value of ImClone system just one day ahead of the announcement of FDA. It is also found out after investigation that she has sold her stocks when she received a tip from her personal broker Peter Bacanovic.

After the long trial, she was found guilty of Insider trading and send to prison for five months along with home confinement of five months and probation for two years for conspiracy, obstruction and lying about sale of stocks.