Can a CEO short his own company?
That would be the ultimate in insider trading. They made a stock transaction knowing in advance what was going to happen to the share price. They could easily expect to face jail time, plus the CEO would still face lawsuits from the board of directors, the stockholders and the employees. "mhoran_psprep has answered the question well about ""shorting"" e.g. making a profit if the stock price goes down. However a CEO can take out insurance (called hedging) against the stock price going down in relation to stocks they already own in some cases.    But is must be disclosed in public filings etc. This may be done for example if most of the CEO’s money is in the stock of the company and they can’t sell for tax reasons.    Normally it would only be done for part of the CEO’s holding." "If we take only the title of the question ""can the CEO short the stock"": It was probably different before Enron, but nowadays a CEO can only make planned trades, that is trades that are registered a very long time before, and that cannot be avoided once registered. So the CEO can say ""I sell 100,000 shares in exactly six months time"". Then in six months time, the CEO can and must sell the shares. Anything else will get him into trouble with the SEC quite automatically. I don't know if shorting a stock or buying options can be done that way at all. So it's possible only in the sense of ""it's possible, but you'll be in deep trouble"".  Selling shares or exercising share options may indicate that the company's business is in trouble. If the sale makes that impression and everyone else starts selling because the CEO sold his shares, then the CEO may be in trouble with the board of directors. Such a sale would be totally legal (if announced long time ahead), but just a bad move if it makes the company look bad. Shorting sales is much worse in that respect. If the CEO wants to buy a new car, he may have to sell some shares (there are people paid almost only in share options), no matter where the share price is going. But shorting shares means that you most definitely think the share price is going to drop. You're betting your money on it. That would tend to get a CEO fired, even if it was legal." Yes. It's called executive hedging, and it's a lot more common than most people know. As long as it's properly disclosed and the decision is based on publicly available information, there's technically nothing wrong with it.  Krispy Kreme, Enron, MCI, and ImClone are the most notable companies that had executives do it on a large scale, but almost every company has or had executives execute a complex form of hedging known as a prepaid variable forward (PVF). In a PVF, the executive gives his shares to an investment bank in exchange for a percentage of cash up front. The bank then uses the executive shares to hedge in both directions for them. This provides a proxy that technically isn't the executive that needs to disclose.  There's talk about it needing to be more public at the SEC right now. http://www.sec.gov/news/statement/020915-ps-claa.html (yes, this should probably be a comment, not an answer ... but it's a bit long). I don't know what the laws are specifically about this, but my grandfather used to be on the board of a company that he helped to found ... and back in the 1980s, there was a period when the stock price suddenly quadrupled One of the officers in the company, knowing that the stock was over-valued, sold around a third of his shares ... and he got investigated for insider trading.  I don't recall if he was ever charged with anything, but there were some false rumors spreading about the company at the time (one was that they had something that you could sprinkle on meat to reduce the cholesterol).  I don't know where the rumors came from, but I've always assumed it was some sort of pump-and-dump stock manipulation, as this was decades before they were on the S&P 500 small cap. After that, the company had a policy where officers had to announce they were selling stock, and that it wouldn't execute for some time (1? 2 weeks? something like that).  I don't know if that was the SEC's doing, or something that the company came up with on their own. It seems also on some international markets this is allowed. http://www.businessinsider.com/li-hejun-shorting-hanergy-2015-5
He can fight it all he wants.  The only thing he's doing is sealing his companies fate.  It'll end up like Allen Edmonds, almost out of business and needing a new CEO.  Good riddance to his overpriced shoes, I'm sure those knockoffs he's afraid of will continue to be sold on Amazon. The CEO of a public company can, and often does, buy (and sell) the stock of his company. In fact, frequently the stock of the company is part of the compensation for the CEO. What makes this legal and fair is that the CEO files with the SEC an announcement before he buys (or sells) the stock. These announcements allow us 'in the dark' people enough warning ahead of time.  See, for example, the trades of UTX stock by their public officers. As for trading on information about other companies, if I am not mistaken... that is why Martha Stewart wound up in prison. So, yeah, it does happen. I hope it is caught more often than not.  On a related note, have you seen the movie 'Wall Street' with Charlie Sheen and Michael Douglas? Just out of curiosity, what if one of those CEOs told Warren Buffett to 'stick it' could Warren Buffett have them removed or would the CEO's board of directors or whatever mechanism the company has only have that right (I mean, not removal for cause, which I am sure is built in but for purely personal reasons)? Just wondering how autonomous some of these companies are because it seems like a handful of corporations own most of the others. &gt; The CEO of Canada’s largest grocery and drugstore chain has warned his shareholders that minimum wage hikes across Ontario and Alberta will cost his company an additional $190 million in expenses next year.  &gt; “We are flagging a significant set of financial headwinds and the organization is mobilizing all of its resources to see whether or not it can close that gap,” said Loblaws Companies Ltd., CEO Galen G. Weston earlier this week.   Is that really so bad of a quote?  He's saying it's something they need to be aware of and address...  I don't get the headline. There is no magic bullet here.   If you want professional management, because you think they know more about entry and exit points for short positions, have more time to monitor a position, etc... (but they might not) try a mutual fund or exchange traded fund that specializes in shorts. Note:  a lot of these may not have done so well, your mileage may vary I'm really unsure what you are trying to tell me. I don't see how knowing CEOs would aid me in forming an opinion on this issue.  Your second statement is simply foolish, shares of a company, represent ownership. Therefore shareholders are the owners.  These shareholders elect a board, this board acts like a proxy between the managers (CEO's) and the owners (shareholders).  This is how every public company operates.   The problem that arises is that managers have an incentive to act in their own best interests, not in the interests of shareholders.  So to solve this manager compensation is aligned with company performance so that if the shareholders are better off the managers are better off. Especially on the bear side. Who wants to short Amazon or Netflix right now? Sure, they may be overvalued companies with disappointing earnings, propped up by non GAAP metrics like subscriber growth, but they have a cult-like following. And as the saying goes: The market can stay inefficient longer than you can stay solvent. "Directors can be held responsible for the liabilities of the corporation - see this Wikipedia article - and especially if it was clear that was the reason for the arrangement, you might well find this happening. That said, I know a Canadian who sold his house to a corporation he already owned (he was doing consulting work through it) at the (in his opinion ridiculously high) amount it had been assessed for property tax purposes. The company paid and claimed any and all expenses including paying for the lawn to be mowed and the house to be painted. He lived in it at a reduced rent (this rent was then income to the company) in exchange for looking after it. He was very happy with the arrangement. He was losing the ""no income tax when you sell your primary residence"" benefit we have here, but since he expected to never be able to sell it for more than the amount the company had paid, he wasn't worried. If the company exists for no reason other than to shelter income, hide you from liability, and reduce your taxes, then I would expect it would get you some unwanted attention and possibly some rulings you didn't like. If the company exists for a real purpose, and has income and expenses that outweigh whatever games you're playing with cars and homes, you might be able to achieve this. You need to work out what the benefits (other than ducking liabilities) would be and whether they are worth the hassle."