InterDigital Inc (IDCC)

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The potential for abuse when managers of public companies sell their shares is great. This is the reason that the SEC has rules for insider trading. The shareholders could profit from insider trading in the following way. Before insiders dump their stock on the open market, the company would have the option to have buy the stock at a price equal to the average price for the preceding year. If an independant management committee did not want to excercise this option, then the stock could be sold on the open market. This would tend eliminate management's manipulating the price in the weeks before they sold and give the public an idea of management's appraisal of the value of the stock by their decision to buy the stock or not.