Financials Jun 27, 2022 07:24 AM (GMT+8) · EqualOcean
On the evening of June 26, Baotou Iron and Steel Co., Ltd. and Northern rare earth, which were questioned by many investors about the existence of insider trading, responded to the inquiry of the Shanghai Stock Exchange, saying that the price increase was due to the sharp rise in the price of rare earth oxide since this year, and no disclosure of insider information was found through self-examination. This response once again aroused public doubts. In view of the growing controversy over this incident, the author believes that the conventional inquiry method of the exchange is no longer enough, and the regulator should synchronously call big data for cross verification. Moreover, it is not the first time for such a phenomenon in the A-share market, and many cases have been later confirmed by big data that insider trading does exist, as evidenced by the previous Wangfujing case. It is difficult to completely block the access to inside information because of the wide range of business information such as obtaining tax-free licenses and substantial price adjustment of purchase and sales contracts and the large number of insiders in the company. However, the disclosure of inside information usually leads to abnormal trading, that is, before the official announcement of good news, investors suddenly buy a large number of shares, which is abnormal from the perspective of their trading habits. Such transactions should not only be the focus of daily supervision, but also be fully used in cases that have caused huge disputes in the market.