Thoughts on Insider Trading in Small Caps vs. Large Caps

Don't have much time to write but I just thought I'd share a few thoughts regarding illegal insider trading. After reading about the recent Citizens insider trading case, one might wonder why there seem to be so few cases of insider trading in small companies. Two reasons come to mind.

1. Journalists don't care much for the smaller stories. People don't know the companies, the amount of money being made or lost is typically smaller, and in general there's little ability for journalists to sensationalize the story.
2. Might a similar logic hold true for the SEC? I've heard that this may very well be the case! In an ideal world, it would be great for the SEC to go after each and every case of insider trading. But the sad fact is that they are constrained by their resources. This naturally causes them to deal primarily with bigger companies and bigger trades.

I'm not endorsing people to go out and try to obtain material non-public information from small companies. That being said, it makes an interesting case for insider trackers. Maybe it's more profitable to follow the little guys, not only because small cap companies tend to be less followed, but also because the insiders themselves may know that they are less exposed to the headline and legal risks which their big cap counterparts are exposed to. This double whammy might create interesting profit opportunities.