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If you’re not inside, you’re outside, OK?

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Relax, Rog, everybody’s doin’ it:

For years, something strange kept happening on Wall Street. Before a big shareholder could carry out plans to sell a slug of stock, the price dropped. It was as if other investors knew what was coming.

It happened when Bain Capital sold shares of Canada Goose Holdings Inc., the maker of trendy parkas; when 3G Capital sold stock in Kraft Heinz Co. ; when Apollo Global Management Inc. sold shares of Norwegian Cruise Line Holdings Ltd. ; and when Alaska’s state oil fund trimmed its stake in an artificial-intelligence software firm.

These transactions, known as block trades, are supposed to be a secret between the selling shareholders and the investment banks they hire to execute the trades. But a Wall Street Journal analysis of nearly 400 such trades over three years indicates that information about the sales routinely leaks out ahead of time—a potentially illegal practice that costs those sellers millions of dollars and benefits banks and their hedge-fund clients.

The Journal’s analysis, covering 393 block trades between 2018 and 2021, found that 58% of the time, the share price declined in the trading session immediately beforehand, controlling for the performance of peer companies. Of the 268 trades for which the Journal was able to determine how much the banks paid, the sellers would have received $382 million more if the stocks had performed in line with the benchmark, or about $1.4 million per trade.

A handful might be explained by a negative headline or chalked up to bad luck. But the persistent pattern of stocks falling in the run-up to big insider sales suggests a more widespread problem: Information that should be confidential is getting out.

This seems like a good time to reiterate that members of Congress should not be allowed to trade individual securities.

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