Insider trading, the covert practice that involves trading securities based on non-public, material information, presents a significant challenge to maintaining fair and transparent financial markets. This illicit activity is often obscured within the vast sea of normal trading activities, making it difficult to detect and prevent. KRM22’s innovative Market Surveillance product contains ParticipantView, which offers a multi-faceted approach to address the challenges associated with identifying insider trading. In this blog post, we will explore the challenges faced in detecting insider trading and how ParticipantView provides solutions to each of these challenges.

Challenge 1: Hidden Historical Activity

One of the primary challenges in detecting insider trading is the ability of wrongdoers to hide their activities amidst legitimate trading. Insider traders often take great care to blend in by executing their trades in a manner that doesn’t raise suspicion. ParticipantView addresses this challenge by offering Historical Activity for a particular security. This feature allows users to scrutinize all orders and trades associated with a suspected trader, broker, or client for a specific security. By examining a trader’s history with a security, analysts can determine whether their current activities deviate from their norm. Sudden and unusual activity in a security they rarely trade can raise red flags, helping to uncover potential insider trading schemes.

Challenge 2: Evading Detection Patterns

Insider traders are not only adept at disguising their historical activity but also at evading detection patterns. They often alter their behavior when they sense scrutiny. This presents a challenge for surveillance systems, as sudden changes in behavior can be harder to spot. To counter this challenge, ParticipantView contains Alerts and Behavior Analysis. In addition to historical data, it displays alerts raised by the suspected trader over a specified timeframe. This feature enables analysts to identify any sudden cessation of alerts coinciding with potentially suspicious trading activities. Such a pattern may indicate an attempt to avoid detection and further warrants investigation.

Challenge 3: Concealed Buy/Sell Activity

Another challenge in detecting insider trading is identifying abrupt shifts in a trader’s position, especially when they attempt to hide their true intentions. For instance, a trader who traditionally buys a security may suddenly start selling in large volumes. This could be indicative of insider information being used to profit from a forthcoming decline in the security’s value. ParticipantView addresses this challenge through its “Buy/Sell Activity Breakdown” feature. This capability allows for a detailed analysis of a trader’s historical activity by categorizing transactions into buys and sells. By monitoring changes in this breakdown, analysts can spot sudden and suspicious shifts, thereby helping uncover potential insider trading activities.

Conclusion

Detecting insider trading is a formidable challenge, given the clandestine nature of this illegal practice. However, innovative tools like KRM22’s ParticipantView provide a robust solution to these challenges. By offering historical activity analysis, behavior pattern detection, and buy/sell activity breakdown, ParticipantView equips financial institutions and regulators with powerful tools to identify and mitigate insider trading risks. In doing so, it contributes to the maintenance of fair and transparent financial markets, where all participants can trade with confidence, knowing that surveillance systems are actively working to protect the integrity of the market. As the financial landscape continues to evolve, tools like ParticipantView will play a crucial role in ensuring the trust and credibility of global financial systems.

Every so often, our professional lives can combine with our passions outside of work. My band, August Son, playing for the 12th Annual ALTSO Rocktoberfest in Chicago is one of those moments and a highlight for me. It’s shaping up to be an unforgettable night of music, camaraderie, and making a real difference in the lives of children in need.

For those who might not know, ALTSO (A Leg To Stand On) is an organization that changes lives by providing prosthetic limbs to children in need. By donating to ALTSO, August Son is directly supporting this mission and helping kids lead better lives. To date, they’ve already provided prosthetic limbs to 22,000 children, and that number continues to grow, thanks to events like Rocktoberfest.

Now, let’s talk music. Rocktoberfest is a showcase of talent from the financial industry, and August Son is proud to be one of the six excellent bands taking the stage. As a musician, nothing beats the thrill of playing live, and when that music benefits those who need a special type of help, it’s truly something special.

Our band, August Son, has a unique mix of members, including two doctors. For them, this event is a highlight of the year, a chance to combine their love for music with their passion for helping others. Some members have said it surpasses sharing the stage with The Marshall Tucker Band and WAR! We’ve been playing since 1989, and over the years, we’ve developed a deep appreciation for using our talents to support charity events in and around Chicago.

Helen Keller once said, “The simplest way to be happy is to do good,” and I couldn’t agree more. Rocktoberfest embodies this sentiment, bringing happiness to all involved while making a profound impact on the lives of those less fortunate. I tip my hat to Gabriella Mueller Evrard, Hannah Schumacher, and Beth Ann Hemming from ALTSO for their tireless dedication and effort in organizing this event.

A heartfelt shoutout is also in order for the Martino Family, the Tidland Family, and my company, KRM22, for their generous sponsorships. It’s the support of sponsors like these that make events like Rocktoberfest possible and enable August Son to continue making a difference through our music.

In the spirit of Rocktoberfest, let’s not forget the joy of coming together with friends, coworkers, and industry colleagues. It’s not just about the music; it’s about the shared experience of making a positive impact on the world. So, come on down to City Winery on that magical evening and join us in supporting this incredible cause.

August Son loves to play live, and our passion for music and charity events runs deep. Keep an eye out for our upcoming shows at venues across the Chicago area. We’re always thrilled to share our music with you, and who knows, your attendance might just change a child’s life for the better.

Here’s how to support August Son:

A Leg To Stand On (ALTSO) is a nonprofit providing free, high-quality prosthetic limbs, orthotic devices, and appropriately fitted wheelchairs to children in the developing world.

Two decades of ALTSO’s Rocktoberfest series have harnessed the power and generosity of the financial services industry to help 22,600+ CoolKids across 20 countries — empowering the next generation.

ALTSO’s 12th Annual Rocktoberfest-Chicago will take place on October 5th at City Winery in Chicago. Rock For Good because mobility is more than movement, it’s a human right. Mobility provides access to education, future employment, and the tools to live self-sufficiently.

A Leg To Stand On, Inc. is a US Based 501(C)3 EIN 02-0594709 & UK Based Charity 1118048