How much does an Illegal Insider Trade?

Alex Frino, Stephen Satchell, Brad Wong, Hui Zheng*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

15 Citations (Scopus)


This paper examines the choice of trade size by an illegal insider. Previous literature (i.e. Meulbroek 1992) tends to focus on the price impact of such a trader. Using a unique data set hand-collected from the litigation reports of the Securities and Exchange Commission and court cases, we provide evidence, which suggests that the size of an illegal insider's trade is a function of the value of his private information, the probability of detection and the expected penalty if detected. Our results have important implication for security market regulators.

Original languageEnglish
Pages (from-to)241-263
Number of pages23
JournalInternational Review of Finance
Issue number2
Publication statusPublished - Jun 2013


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