News of the Weird: Kids' account show signs of insider trading

  • by: CHUCK SHEPHERD
  • Updated: May 3, 2013 - 1:04 PM

A University of Kansas professor and two co-authors found that children age 10 and under substantially outperformed their parents in earnings from stock trading in the few days before and after rumors swirled on possible corporate mergers. A likely explanation, they said, is that the parents or guardians were buying and selling for their children’s accounts using illegal insider information that they were cautious about using in their personal accounts, which would more easily arouse suspicion. While the parents’ accounts had nice returns, the kids’ accounts were almost 50 percent more profitable. The study, reported by NPR in April, covered 15 years of trades in Finland, chosen because that country collects age data that the United States and other countries do not. It is to be published in the Journal of Finance.

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