CHEATING is certainly rife in the financial world. You can hardly open a newspaper without reading about some or other scam, at all levels in both the financial and real economies. Is it worth it?In financial markets, the most common form of cheating is insider trading — trading based on information that is price-sensitive, but is not in the public domain. The most obvious example would be when a price is known in advance of its publication, for an event that is certain to happen in the future.When a takeover bid is announced at, say, a 20% premium to the ruling market price of the target company, that will cause an immediate change, of a like amount, in the target company’s share price (typically a little less than the full premium, to allow for the present value of money and regulatory uncertainty).So, if you’re sitting in the boardroom when they’re shaking hands on the deal terms and you phone your mate on the trading floor so he can buy before the deal price is made public, you’...
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