Tuesday, March 06, 2007

The Information Asymmetry Age?

If you have not heard of the term Information Asymmetry, I would like to introduce it to you:

In economics, information asymmetry occurs when one party to a transaction has more or better information than the other party. (It has also been called asymmetrical information). Typically it is the seller that knows more about the product than the buyer, however, it is possible for the reverse to be true: for the buyer to know more than the seller.

Jim Cotton has already touched on one of the issues information asymmetry raises. I would like to go one step further and ask if ANY Crocus insiders acted on the information they had about the fund’s poor performance. I am not accusing anyone in particular of profiting from an opportune dumping of shares prior to the public being aware of the many problems facing Crocus. However, insider activity prior to the fund’s decline it is one of the matters that a public inquiry should address.

I know of at least 30,000 people that deserve to know if we should have faith in the integrity of our capital markets. If anyone has called said integrity into question they merit the appropriate sanctions.

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