Insider trading has become more “socialized” as young white collar criminals become more connected online, an upcoming study has found.Montieth & Co., a communications consultant group, on Wednesday released the preliminary results of a study exploring exactly how insider trading works in the “Facebook generation.”
The study focused on the 76 people charged with insider trading since Manhattan’s fierce federal prosecutor Preet Bharara took office in August 2009.
It found insider trading has changed dramatically since the 1980s, when one charismatic guy like the notorious Marty Siegel masterminded a scheme.
“In today’s intra-socially connected networking model, the power and influence is distributed more ‘democratically’ across a complexly interconnected network,” a summary of the study stated.
Unlike old insider trading schemes that mostly involved bankers, now more types of companies get in on the action – from hedge funds to corporations to “expert networks,” which connect investors to people who can give them insight into various industries.
It makes sense that white collar criminals might be more connected to folks working for other types of companies.
More than half of 76 people recently prosecuted for insider trading were between the ages of 31 and 40, meaning a number of them were just finishing up grad school when Facebook launched.
“They grew up in their professional lives with social networking as a model for interacting with others, for creating bonds and exchanging information,” the study said.
The Wall Street Journal first reported on the study Thursday.
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