I am working on a case study, and was asked to calculate the loss. Due to insider trading. In summary,
July 1 target price/share = $25
Aug 1 target price per share = $30
Aug 2, the company announced the merger and that they would be paying $36 per share, but there was extensive amounts of insider trading the entire month of July, so the price per share increased $5 that month.
What would you calculate as the loss?
Do I need more info to be able to make a simple calculation for this?
I'd find the average percentage move during that same period for the past couple years and then see which bucket that percentage move is in and you will be able to figure out how much insider trader effected it. I doubt it matters unless you are like 2 standard devs out. Pretty simple.
You could also look at the insider trader volume and see if it would be enough to move it. There are numerous approaches to this problem.
Just use your brain and you should be able to figure it out.
Best of luck
Loss to who? Insider trading doesn't have to move the price, it can simply deprive another market participant of gains or allows the inside trader to avoid a loss. If there's market manipulation on top of the insider trading, then take a look at the SEC's diagnostics, they're especially good at catching when people bang the close.
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