Places, Trading

The Chicago Tribune published an impressively wide-ranging study of inside trading among top executives. Offering several examples of such trades, the heavily researched piece found that:

  • Top executives and directors are active stock traders before telling investors their earnings outlook has changed.
  • They frequently jumped in before particularly bad news.
  • For most sales, the timing was profitable.
  • Those closest to the top had the biggest savings.

While many executives referred to in the report declined comment, several said that any stock sales by chief executives are dicey. Bill George, author of the October Fast Company Book Club selection, said, “There’s never a time when I don’t have inside information as a CEO. That’s my job.” And Michael Jordan, CEO of EDS, remarked, “I doubt that I would sell any shares while I was active.”

As a business journalist, I do not actively trade stocks in companies covered by Fast Company. And it seems fair to expect that chief executives would be extremely careful of their individual trading activity — especially given the amount of information they have about their organizations’ performance.

But what do you think? Should top leaders actively trade stock in their own companies? Take the Fast Company poll.

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