Do Brokers of Insiders Tip Other Clients?

This paper finds evidence that brokers who execute insider trades on the Toronto Stock Exchange engage in tipping and insider trading. We find that on the day when insiders buy (sell), there is a significant increase in the proportion of non-insider client buying (selling) handled by the insider’s brokerage firm. Furthermore, we find that the brokerage firm doubles the amount of its own buying (selling) on the day of insider buys (sales). Canada has similar insider trading rules to the U.S. and a number of other countries: insider trades are disclosed with a lag and tipping is illegal.