Insider Buying at Financial Firms Hits 23-Year Low as Bank Earnings Loom

Only 298 financial-sector executives bought shares of their own companies between July and September — the lowest count in VerityData's records, which stretch back to 2004, and just under the prior record low of 302 buyers in the third quarter of 2024.

The figure lands days before Wall Street's biggest banks open third-quarter earnings season. JPMorgan and Goldman Sachs report on Oct. 13. Morgan Stanley follows on Oct. 14.

Ben Silverman, head of research at VerityData, calls the decline in buying a "negative data point" for investors positioning ahead of the results. In his telling, the numbers say something about how insiders view their own valuations.

What does the data show?

VerityData tracked insider trading across more than 3,000 financial services companies, ranging from big banks to asset managers to insurers. The 298 "unique financial-sector buyers" — employees who made at least one purchase of their company's stock — set the near-23-year low.

Selling activity was somewhat higher, but not unusually so. Securities filings show the pattern at the top of the industry: JPMorgan executives routinely unload shares worth upwards of $800,000 in a quarter, and a Goldman insider sold more than $600,000 of company stock a little over a month ago.

The trend extends beyond finance. Across the broader stock market, insider buying fell 18% quarter over quarter, to 1,290 buyers from 1,580 in Q2.

Why does insider buying matter?

Investors watch insider transactions for clues about how those closest to a company judge its prospects. Buying can signal management confidence. Selling is harder to read: executives may sell to cover taxes, diversify holdings or execute prearranged trading plans.

Jesse Fried, a professor at Harvard Law School, sees weight in the current numbers. Fewer financial executives buying their own shares can indicate "a bearish signal for that sector," he said, because "inside purchases by executives tend to predict future market-beating returns for their firms."

Silverman agrees that the drought in buying suggests insiders are "skittish" about valuations.

"When equity prices get to a point that insiders feel that there's a price dislocation between where the market's perceiving a valuation, and where they believe it to be, they'll hold off on buying," Silverman said. "Like other investors, they're not trying to chase stocks and they're not trying to buy something they think is perhaps above fair value."

Do skeptics have a case?

Not everyone treats the data as predictive. "I'm very skeptical that this means anything," Nejat Seyhun, a finance professor at the University of Michigan Ross School of Business, told Fortune. "When you look at how predictive insider trading is in the financial sector, it isn't predictive at all."

While insider trading can correlate with future returns in the broader market, Seyhun says banks rank among the weakest areas for that kind of prediction. Bank stocks depend heavily on macro factors — changes in monetary policy, interest rates and inflation — rather than information management might hold.

"Those are the kinds of things that affect the banking sector the most, and that's not the kind of information an executive can have," Seyhun said. "So, as a result, it's very difficult for them to predict future stock returns in their own companies."

What's next for the big banks?

The insider signal arrives against a mixed backdrop. Trading desks have set records and blockbuster listings like SpaceX in June lifted dealmaking revenue. But the IPO market has stalled: Oura and Bamboo Insurance delayed their offerings last month. The Fed raised interest rates around the same time, a move that can make corporate dealmaking more expensive.

Companies are also borrowing heavily to fund AI initiatives — a lending spree that could hurt large Wall Street firms if clients cannot repay.

Bank stocks have lagged the market. As of Wednesday, the KBW bank index was down nearly 11% over the past month while the S&P 500 advanced 1%. The financial index remains up 3% so far in 2026.

"That's something to have in your cons column as people, or as investors, are preparing to digest those earnings and understand them," Silverman said of the insider data. "And if they're looking to position ahead of it, then it's certainly a negative data point."

With insiders declining to buy at a two-decade low and bank shares already sliding into earnings, the Oct. 13 reports from JPMorgan and Goldman will test whether management confidence — or the macro forces Seyhun points to — sets the sector's direction.