Agnieszka A. Baklarz

Insider trading and fraud is one of the main violations of the symmetry of information on the stock market. insider trading is therefore regulated by law in many countries. For example Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation (market abuse) lists two types of entities for which it is forbidden to make transactions insider trading. First are that are related the company whose shares are buying or selling in the stock market (for example: managers, employees and so on). But on the other hand are “any person (…) who possesses inside information while that person knows, or ought to have known, that it is inside information.” (article 4 Directive 2003/6/EC).

While insider trading carried out by insiders of enterprises is studied in a few papers but insider trading carried out by all the other people practically is not tested. This caused due to extremely difficult proving that such a crime occurred.

Our studies show that insider trading carried out by private insiders can increase the efficiency of the market and accelerate the change of the share price to reflect the confidential information. The study is based on the verification of the means of propagation of information in networks of private investors. The study was conducted using data from the Stock Exchange in Warsaw.