Company insiders are selling stock during buyback programs and making additional profits

[Yo_Mama_Been_Loggin]

when stock prices jump. And it’s legal.

In February 2017, the company behind the hit games Candy Crush and Call of Duty signaled optimism in its future and announced a $1 billion program to buy back its own shares — and investors responded by buying heavily.

But few of them could know that as they were buying, insiders at the mobile gaming titan Activision Blizzard were selling, and taking home additional profits as the stock price jumped.

On Feb. 10, a day after the company announced the buyback plan, Bobby Kotick, Activision’s chief executive, sold nearly 4 million shares for $180.8 million. The average share price of his sales was 15 percent higher than he would have gotten before the stock rose on the news.

By Feb. 17, a total of five top Activision officials had sold shares totaling over $430 million, according to their filings with the Securities and Exchange Commission.

https://www.washingtonpost.com/business/economy/company-insiders-are-selling-stock-during-buyback-programs-and-making-additional-profits-when-stock-prices-jump-and-its-legal/2019/11/06/fc592f58-e493-11e9-a331-2df12d56a80b_story.html?wpisrc=al_news__alert-economy--alert-national&wpmk=1

[safeinOhio]

1. I'd have no problem with a

90% tax on profits like that. Most likely won’t pay any.

[ret5hd]

2. Insider trading? Instead of 90%, how about a few years?

[GopherGal]

3. doesn't sound like illegal trading to me

I'm not a lawyer, but in the insider trading policies I've had to sign, it's been defined as trading when you have material non-public information. Once it's been released publicly, it's fair game.

Deciding not to sell shares you already own until the information is released (because you know the stock will go up when the info is released) seems to be permissible, near as I can tell. (Although buying additional shares would be illegal while in possession of the material non-public info.)

My former employer had a 48-hour lockdown on trading by employees after major announcements. Near as I could tell, that was one of those "abundance of caution" things that served to avoid the appearance of anything underhanded by imposing restrictions in excess of statutory requirements.

[ret5hd]

4. The insider info I was referring to...

was the fact that the company is actually going down in value.