Insiders Are Not Always Executives - Politicians Loosely Regulated
The behaviour of insiders—managers, officers or anyone who owns more than 10% of a company’s shares—has long been regarded as a good indicator of a stock’s future direction. An insider knows the company intimately, and while he or she may sell their shares to finance a house purchase or other major expense, an insider who buys into the company shows they are confident the stock will rise. Investors can profit by trading alongside these corporate soothsayers.
Insiders need not be corporate executives, however. Politicians may also be considered insiders, since they are privy to upcoming legislative changes and the awarding of government contracts that affect publicly traded companies. If you believe that there are strict and well-enforced laws that prevent politicians from trading on non-public knowledge, you may be forgetting who makes the laws.
Corporate insiders must file reports with regulators whenever they buy or sell their company’s stock. In Canada, the regulatory agency is the Canadian Securities Administrators’ System for Electronic Disclosure for Insiders (SEDI), while its counterpart in the United States is the Securities and Exchange Commission (SEC) Edgar database. To prevent short-term trading on non-public knowledge, insiders are not allowed to sell within six months of buying.
Common sense comes into play when using insider reports, whether from the raw data found on regulatory sites or from third-party subscription-based sites that analyze the data. A sale or purchase by a single individual is of less significance than several simultaneous buys or sells from everyone in upper management. Insider buying by insiders at small-cap firms, where senior managers can keep a close eye on their company’s affairs, ought to generate better results than those by executives at large-cap corporations who must keep track of operations all over the world. As well, it’s logical that chief executives, chief financial officers and the most high-ranking insiders are more likely to be privy to non-public information about their company than outside shareholders, regardless of how large their stake.
Another positive sign for investors comes when trading data shows insiders buying when a stock is depressed after, say, a disappointing earnings outlook or poor guidance, although insiders are barred from trading during set blackout periods. If there is no insider buying when the blackout ends and a stock still appears undervalued, however, it may indicate that managers expect the bad news to continue.
Regardless of when the insiders bought, it’s a good sign when many executives have large personal stakes in a company, since they’re likely to make decisions benefitting all shareholders. At the other extreme, investors have justifiable concerns if the list of insiders shows only a few names with enough confidence in their own company to hold more than token amounts of its shares.
Insider trading may hint at the future direction of the overall market. The insider buy-sell ratio, an aggregate of reported insider activity, reflects overall insider confidence in the market, and has proven useful for those who want to time their trades. A high median buy/sell ratio above 0.5 shows insiders are optimistic about the market, while one below 0.5 reflects pessimism. As of June 2025, the U.S. buy/sell ratio median is 0.4, down from 0.51 in April, says the Gurufocus site. The highest reflection of insider optimism in the past five years came in May 2022, when the ratio reached 0.81, while the lowest was 0.17 in February 2021, the Gurufocus site says. Neither SEDI nor SEC publish anything on the buy-sell ratio.
Politicians may have access to more profitable inside information than do corporate insiders themselves, as almost every regulatory change has at least an indirect effect on some company, somewhere.
In Canada, the federal Conflict of Interest Act prohibits holders of public offices from using non-public information to benefit themselves, their relatives or friends. The act requires the Prime Minister, cabinet ministers and other “reporting public office holders” to sell certain assets or put them in a blind trust while they are in office. Public office holders must provide a confidential report on what they own within 60 days of taking office, the Act says.1 Ordinary Members of Parliament, however, are free to trade.
The federal Lobbying Act requires lobbyists who act on behalf of corporations to provide regular reports to the Commissioner of Lobbying, Nancy Bélanger.2
There are no sites that track trades by Canadian politicians and requirements for Canadian legislators are less demanding than those required by U.S. authorities. In the United States, the 2012 Stop Trading on Congressional Knowledge (STOCK) Act required politicians to disclose their stock market trades within 45 days, but the fine for failing to disclose trades is a token of US$200 per infraction. Reporting has been slow and lax and so far, many of the politicians accused of failing to report have not even bothered to pay the token fine. More recent efforts to tighten regulations on insider trading have yet to pass, an October 2024 report says.3
The perception that U.S. politicians can freely buy or sell stocks based on non-public information has led to the establishment of subscription-based sites that track their trades and even two Exchange-Traded Funds (ETFs) that try to duplicate politicians’ investment holdings. The Unusual Whales Subversive Democratic Trading ETF (NANC) tracks the trades of Democratic lawmakers, with a particular focus on California representative and former House speaker Nancy Pelosi, whose husband Paul is a venture capitalist. The Unusual Whales Subversive Republican Trading ETF (GOP) tracks Republicans.
Several third-party websites sift through regulator’s insider trading data to offer investors insights into investor activity. Like most investment sites, many allow casual visitors to see their basic features for free while urging them to sign up for a one-week or one-month trial using a credit card. The card will then be charged unless you cancel before the trial period ends.
Barchart (barchart.com)
Chicago-based Barchart, launched in 1995, was an early entry among investing sites. Barchart allows access to more detailed insider data than offered to casual visitors by other sites. Under its Investing tab are up-to-date lists of corporate insiders and politicians that can be sorted and screened by country, company name, date range, type of trade (buy or sell), dollar amount and so on. After a one-month free trial, subscriptions start at US$17 a month.
Capitol Trades (capitoltrades.com)
Powered by the 2iQ Research insider trading “data factory” based in Frankfurt, Germany, Capitol Trades provides a free weekly newsletter on trades made by U.S. politicians. The site sifts through data on trading over the past three years: 34,539 trades by 217 U.S. politicians who made 1,714 filings of trades involving 3,119 issuers. Potential subscribers must first provide their email address.
Gurufocus (gurufocus.com)
Founded in Plano, Texas in 2004, this US$499-a-year subscription-based site follows 144 of the most successful investment “gurus,” quoting from their general advice and tracking their trades. The latest insider information is available only to subscribers, but others can still spend hours on the site wading through its mountain of free information, including dozens of stock screeners and other tools, market news and the like. Gurufocus founder Charlie Tian, who wrote Invest Like a Guru in 2017, is a high-profile figure who offers extensive commentaries.
Insider Tracking (InsiderTracking.com)
This Vancouver-based site provides insider net buy-sell lists and charts by company, together with links to weekly insider trading reports and other tools on its Canadian Insider and INK Research sites that focus on insider trading. Among other features, subscribers can be contacted when stock insiders on their watch lists are buying or selling. Subscriptions are US$17.79 a month.
InsiderScreener (insiderscreener.com)
This site features subscription packages of $16, $27 or $55 a month linked to levels of desired detail. Casual visitors checking out the site for free can see raw data and one-year stock price charts that highlight the dates of insider purchases (green dots) and sales (red) for specific companies. Visitors can also see the trades of individual insiders tracked over five years. Only paid subscribers may use the site’s screeners and alerts. The InsiderScreener site provides no direct information on its physical location other than the founder’s first name, Emmanuel.
MarketBeat (marketbeat.com)
Based in Sioux Falls, South Dakota, MarketBeat allows casual visitors to access free Canadian and U.S. insider trading data, including buys and sells made by corporate executives and U.S. members of Congress. The tables can be sorted by country, sector, market cap and transaction size but more analytical research is limited to subscribers who pay US$33.25 per month or US$399 a year.
Quiver Quantitative (quiverquant.com)
Quiver was launched in 2020 from the Madison, Wisconsin apartment of two recent university graduates, twin brothers James and Chris Kardatzke. This site, based in Spring Green, Wisconsin, says it aims to bridge the gap between sophisticated insiders and retail investors, with a focus on U.S. politicians and corporate lobbyists. Visitors can see insider trades by politicians, insiders and institutions for free, while subscribers who pay US$25 a month (US$300 a year) get strategies, alerts and other features.
SECForm4 (SECForm4.com)
Based in Houston, Texas, this relatively easy-to-navigate site provides insider trading reports, buy/sell ratios by company and some quarterly institutional trading data free for casual visitors. Along with insiders, the site also allows visitors to sift through lists of hedge funds to see the best performers, their holdings and money flows, not all of which are up-to-date. More detailed tools and data are available to subscribers in basic (US$486 per year) or advanced ($539) packages.
Richard Morrison, CIM, is a former editor and investment columnist at the Financial Post. richarddmorrison@yahoo.ca
https://laws.justice.gc.ca/eng/acts/l-12.4/
https://laws-lois.justice.gc.ca/eng/acts/c-36.65/
Politician Trading: If you can’t stop them, join them. Report by David Axelrod, Hannah Welsh of Ballard Spahr in, Law.com, Oct. 2, 2024