Insider trading and share manipulation on the Stock Exchanges of the Western World have been going on since the beginning of stockmarket time.

Occurring in many forms and guises, they always seek to satisfy the self gratification of the few at the expense of the crowd, who often mistakenly believe that 'regulation' asserts both protection and prevention of such things.

IT AIN'T SO

But in the real world, nothing could be further from reality, because between 1996 and 2000, there are only three cases of successful prosecution filed. It seems then, that only in the most exceptional cases, usually when the perpetrators either slip on their own banana skins. or fall on their own swords, is there any punishment to be expected for the crime.

PUMP AND DUMP

One such example in the USA, was in early 2001 when a 16 year old boy bought large blocks of nine low-priced shares, hyped them on Internet financial message boards and then, within 24 hours, sold his shares after the price rose. He used this method twice with two shares. He was prosecuted for profiting from the "pump and dump" scheme, and agreed to pay back $285,000. However, according to 60 Minutes, he actually made $800,000 from 16 trades which the SEC did not pursue!

One person on a well known USA TV show said "there was some manipulation but there is little difference between what the boy did and what is done every single day of the week on Wall Street, i.e. he touted various shares, and then sold them, after the prices went up."

MOST INVESTIGATIONS FIZZLE OUT

Also in 2001, In Washington, the chief executive of Amazon.com was reported to be under investigation by the SEC for allegedly selling shares in the company prior to the release of a negative report by a Wall Street Analyst which questioned whether the web's biggest success story was heading for a credit squeeze later in the year. No successful prosecution there.

PEOPLE ARE THE SAME WHEREVER WE GO

There is nothing different overseas either. During March 2001, Bombay's Regulatory authorities had a busy month investigating allegations that a bear cartel manipulated prices on March 2, unnaturally reversing a positive reaction to the budget, and benefiting short sellers. Influential brokers were subjected to after hours raids in a widening investigation on market abuses. Brokers in Calcutta had been struggling to meet margin calls against collapsed share values, and in the week before's effort to avoid the crisis, many resigned and a number committed suicide.

The president of India's biggest stock exchange had already quit amid allegations that he sought privileged market data, after the local press reported the existence of a tape which allegedly recorded him demanding sensitive price information from subordinates, alleged to be connected with the massive price crash that erased the positive impact of one of most reformist budgets in recent years. The SEBI, which polices the country's volatile capital markets, said it was examining the tape and would take appropriate action if evidence of insider trading or other abuses of office were detected. The previous President to him had been sacked after allowing brokers to access the trading system after market hours to enter fictitious data. All this was on top of revelations of corruption in government defence deals.

CHINESE TAKEAWAYS

In China, in March 2001, three Chinese economists from state-funded think tanks warned in an open letter to the country's parliament over the emergence of a "financial oligarchy" that manipulates the stock market to enrich itself at the expense of the broad masses. The letter claimed that a special interest syndicate - which includes the China Securities Regulatory Commission, the Shanghai stock exchange, the Shenzhen stock exchange, securities companies, listed companies and investment funds - all want to see stock prices rise to serve their interests, and to assist their cause, they restrict the supply of companies to list, are lax in supervision and underestimate the value of companies about to list - helping to create a myth that "stir-frying" stocks makes you rich.

The letter also stated that unless this practise was stopped China could create a financial oligarchy raiding the country's wealth, exacerbating the polarisation of rich and poor and even manipulating the development of the political situation and selling out the interests of the people," said the letter to the National People's Congress (NPC), which is holding its annual session. The letter said that people who sell stock at below its market price should be fined and called for an investigation into market players who, it added, should compensate the losses of small shareholders if they are found to have made illegal profits. The letter came at a time of considerable argument among state economists over the health of the stock markets. Wu Jinglian, a famous and influential economist, had earlier called the markets "worse than casinos".

ALL IS FAIR IN LOVE, WAR AND THE INVESTMENT BUSINESS.

In the UK, it has been noticed that sections of the Investment Industry seem able to get away with advertising financial products by illustrating performance figures that are either horrendously out of date, distorted, or created by fund managers who left long ago.

ALL TOPS AND BOTTOMS ARE MANIPULATED

That there are Syndicates of big money operators who largely control the tops and bottoms of markets is only doubted by those who cannot comprehend how this is achieved, or cannot believe that the Authorities could or would permit such a loading of the dice, yet I have over the last decade produced hundreds of share charts and illustrated how they can often be read to reveal these events, the majority of which, I believe, pass with neither disquiet nor discovery.

In any market which is in largely liquid and bullish conditions, any rumour about any share may of course have some short term effect on a share price, but those who experience follow through are only those in which the rumour has some foundation, but surely that can only occur as a result of information leaking out of the company or its associates, and is this not insider trading at its most basic?

WHAT'S GOOD FOR THE GOOSE............

Therefore, as only one of heaps of examples, I turn your attention to another aspect of chart reading, that of having no access whatever to inside knowledge from a company about its shares or its business, yet still often being able to gain from insider trading - perfectly legally!

Indeed, Mr. Archer (not sure if he still a "Sir" now that he is detained at her Majesty's pleasure on other matters?) supported his denial of insider trading in the shares of a company which his Spouse was involved with at management level, by simply citing that he had "noticed a lot of volume" in the share chart. Fair enough, can't argue with that - I believe him, so there is no reason I can think of why we cannot do that too, as long as we make sure that it is always a true statement that we do not actually have any insider knowledge, and can show our chart to explain why we are so good at picking these winners. Right?

ONE EXAMPLE

The appearance of an unusual thinning of price range during a descent, accompanied by an abnormal volume which at that date remains unexplained, is one of many bar formations on a chart which may reveal insider trading in progress.

Below is a daily share Chart of Ascot, you will observe at Point 1 - that "huge volume" has appeared following a long period of downward drift. Furthermore, notice above that point the narrowed price range, and despite around 5million shares being traded the price has only moved (down) a half penny on the day! - this was Wed 21st March 2001, two days prior to the company's public announcement of bid talks!!!!!!!! The price was 239.5p.

At point B, this was the next day, Thursday 22nd March, you will see the surge in price to 265p!! That's over 10.5% (who says you can't make money daytrading?)

At point C, the day of Friday 23rd March sees a further whopping 56p rise to finish the day at 321p.

Was this Insider Trading?

I don't know, for if I did I would know something I should not know and might actually be insider trading, but as I know nothing at all, so long as this method of reading a chart can keep providing such fantastic trading signals - I don't want to know!

Please make up your own mind, and email me with your views, but not your complaints, which should be directed to the Chairwoman of the London Stock Exchange!