Traders who act on confidential insider information usually try their best to keep their actions hidden from view. But other times, insider trading just leaps off the page, as if someone decides to directly flout securities law.

A recent case filed by the Securities and Exchange Commission falls into such a category. It is as if the trader in question had a sign on his back that said: A Federal District Court in Chicago froze the account at the S.

So those paper profits are likely to be kept out of his hands for at least a while.

Badin opened his account just days earlier, and the only trades were in Smithfield securities that would lose much of their value unless the stock price jumped in a short period of time. He also bought a large number of single-stock futures contracts; a person buying such a contract has to purchase shares by a set date.

These contracts only require payment of a small commission, but the owner must also put up 20 percent of their value by buying them on margin. This is the first time I recall seeing this type of futures contract used in an insider trading case.

The margin requirement makes the futures contracts much more costly than option contracts, forex trading margin india their use also shows just how eager Mr. Badin was to get his hands on as many shares insider trading futures markets Smithfield as possible. Badin wanted to make his trading stand out, he could not have done a better job.

The options trading accounted for a substantial portion of the market, and the futures contracts were percent insider trading futures markets the trading during this time. Although not mentioned in the complaint, the S. Badin, an employee at a plastics company, is fronting the stock market probability calculator for others.

Perhaps the oddest trade was Mr. That hardly seems worth the effort, but not all traders are rational in their purchases. The hurdle the S. To establish a violation, it must show that Mr.

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The companies usually cooperate by providing a list of everyone who knew about the negotiations, so it becomes a matter of the S. When a trader like Mr. Badin is outside the United States, then it becomes even more difficult because access suze orman stock trading telephone records, e-mails and other evidence is not readily available.

In the Smithfield transaction, Shuanghui was not the only potential bidder. Another company interested in Smithfield was Charoen Pokphand Foods, a Thai company.

Although Charoen Pokphand Foods was not the part of the final deal, just knowing that Smithfield had put itself up for sale was valuable information — even if Mr.

In searching for the link to inside information, the S. A Facebook connection, of course, only proves that two people ostensibly know each other, and even that link can be tenuous if the person has hundreds of friends.

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The connection to someone at the Thai investment bank is evidence of a plausible source of confidential information, but not much more than that. This is especially true when the trader is outside the country and tries to withdraw money, because it would then be nearly impossible to get it back. The evidentiary threshold is quite low at this stage, and the court will require something more than just a Facebook friend if the case is contested.

Badin never responds, then the S. A textbook case like this is likely to have federal prosecutors very interested in who is behind the trading. Sections Home Search Skip to content. The New York Times window. DealBook Want to Commit Insider Trading? Subscribe Now Log In 0 Settings. Close search Site Search Navigation Search NYTimes. Clear this text input. Henning June 10, Freezes Assets of Thai Trader in Smithfield Inquiry June 6,