let’s say that the company of a publicly traded company wants to buy another listed company
so the company or the ceo slowly starts loading on the target company’s stock and spreading the news that this target company is going to be bought
so as more people come to know , they too start loading up on the stock and the price starts moving up
one fine day , the ceo decides to make this information public – in the news – there is an announcement and the general public starts buying the shares of the target company ..
that’s when the ceo / acquisition company starts to sell the shares of the target company and make a huge profit – which partly or fully can fund the target company’s acquisition ..
they could also pay off the regulators to prevent insider trading charges – they trade on knowledge that is not known to the general public
