Part III : Some final thoughts on insider trading

Abstract

Part ll of this feature on insider dealing ended with a reference to an early episode of share manipulation by the spreading of false news, taken from the Alexander Dumas novel, The Count of Monte Cristo. This work was written around 1844. It is interesting to note the similarity between this fictitious episode and the facts in a real English court case R v. De Berenger which had been decided only some years earlier, in 1814, at the height of the Napoleonic wars. This English case also concerned an early example of market manipulation, rather than actual insider dealing. Apparently this De Berenger was quite a colourful and theatrical Frenchman who visited England and went around always dressed in military uniform and spreading gold as well as false rumours that Napoleon Bonaparte had been killed. He had earlier acquired substantial holdings of government gilts at a relatively low price occasioned by the uncertainty of the outcome of the wars. He now intended to exploit the circumstances of the time to make a quick profit.