Here's another installment of "Finance Professors Behaving Badly":
John Marshall (retired finance professor at St. Johns University) and Alan Tucker (currently on faculty at Pace University) were recently accused by the Securities and Exchange Commission in March of passing along and trading on inside information about the takeover of The International Securities Exchange by Eurex. According to the S.E.C.'s allegations, Tucker, made more than $1 million trading on the tips he received from Marshall in 2007.
Read the whole thing here.
What's surprising is not that this happened, but that it doesn't happen even more often. Although the inside info didn't come from either of their finance classes (it came as a result of Marshall sitting on the board of a takeover candidate), finance professors (and particularly those in schools in the NYC area) get a lot of info.
Either we're smart (or ethical) enough to trade on that information, or smart enough not to get caught.