Was There Insider Trading Based on AIG's Profit?

Surprisingly, AIG announced this morning a profit for the most recent quarter. This is the company that was on the verge of blowing itself up last fall, and the U.S. financial system with it, when the government stepped in and bailed it out to the tune of over $100 billion. AIG hasn't reported a quarterly profit since 2007, so this unexpected news is good. Maybe fiscally stressed U.S. taxpayers will get back a few pennies on the dollar of their largess.

What's troubling is that AIG's stock more or less doubled in price in the last two days, before the profit announcement. That's a pretty good indication someone may have had advance knowledge of the profits and used it to make some fast money in the stock markets. There's already been lots of profiteering from the government bailouts of Wall Street. AIG wouldn't exist but for the generosity of the taxpayers. Insider trading based on nonpublic corporate financial information often involves company executives or employees, who might trade and/or tip family and friends who then trade. AIG's executives and employees wouldn't have jobs today if the government hadn't saved the company. Thus, such insider trading, if it occurred, wouldn't have been possible but for the government bailout. We don't need insider traders stepping up to the trough to illegally slop up their fill while millions of unemployed try to make a go of it on unemployment. Let's hope the SEC and maybe TARP Inspector General Neal Barofsky have already started investigating.