An event based approach for quantifying the effects of securities fraud in the IT industry |
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Authors: | Lorne N Switzer Jun Wang |
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Affiliation: | 1.Finance Department, John Molson School of Business,Concordia University,Quebec,Canada;2.Department of Management and Organizational Studies,University of Western Ontario,London,Canada |
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Abstract: | Detecting the incidence and impact of illegal insider trading is a difficult process since access to the actual trading records of insiders that overlap precisely with fraudulent events is difficult. This paper provides a case study of a specific IT stock in Canada that was successfully prosecuted in the Canadian court system for market manipulation and illegal insider trading violations. The study provides a quantification of the impact of insider trading activities by the President directly through his own account or through accounts under his control, and illustrates the impact of some off-exchange transactions by the impugned parties. Overall, the costs of the insider trading violations are quite high, given the significant wealth effects produced by the events surrounding this case. |
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