In 2007, Qwest Communications CEO Joseph Nacchio was convicted of making over $50 million dollars through illegal trades.
Essentially, Nacchio knew that the company wasn’t doing well, while telling the public that it was on track to pursue highly exaggerated revenue gains. He capitalized on the inflated stock, and was, of course, caught and found guilty. He’s currently serving a six year prison sentence.
Another case, which involved a much smaller amount of money but was more widely publicized, involved businesswoman and magazine/television personality Martha Stewart.
In 2001, she suddenly dumped a large amount of ImClone stock she owned in her portfolio, and the next day ImClone fell by 16%. As it turned out, the CEO of ImClone, Samuel Waksal, was her good friend, and she received the insider information through her broker, Peter Bacanovic.
In this case, insider trading was used to avoid losing money, versus securing big gains. All three served prison sentences and paid various fines, but have since been released.
What is Insider Trading?
What are Some of the Biggest Bankruptcies in Recent History?
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