Is it ethical for insiders to dump shares into self created price rallies?

The company in question based out of Houston, Texas is ION Geophysical Corporation stock ticker IO trading on the NYSE. If you were alive you would have seen the stock reverse split and then rocket after the company reported they couldn't pay off their debts but were going to stretch them out thus paying more interest and a higher rate for doing so. They have cut almost half of the staff through layoffs to use that new cash to inflate the stock prices from November 2015 to February 2016 and may now be doing so again. Listen to the call here http://edge.media-server.com/m/p/46en7wtd/lan/en

This was not positive news yet the stock went up in price it was due to 2 things insiders pushing the price up with buys and unsuspecting traders hungry for a rallying stock diving in.

When the dust settled it was apparent that with the help of promotion the stock moved to give a area for what we call a boxed trade. Where you buy around your position and sell above your position to give a false sense of liquidity to those who did not pay close attention to the price action and chart.

The major concern of this is simple historically the insiders have acquired and sold completely all of their shares and with the price being well above their average you can assume this has or will happened again.

I will make this short and to the point this company has dropped in adjusted weekly close value of $203.25 to $4.60 yet the insiders took home a combined salary of $3.92 million with the CEO taking 1.38 million himself. So when he filed that he added 70,000 more shares 50,000 at a price of nothing and 20,000 he bought himself for a total average price of $1.095 it would seem apparent that if the stock price should rally there would be a way to liquidate older securities that have now expired their vesting period. Might as well they were given for free back then too. In the last 6 months there has been an offloading of 267,200 insider shares but an even more alarming 9,311,000 shares held by institutions.

In the earnings call the company admitted to actively buying back shares in the last quarter to prevent de-listing at $0.15 do the math on how many pre split shares were bought using $3 million in the companies money from 1 off payments. Transcript here Seeking Alpha Transcript

How is that a company with a chart that is sliding downhill is shelling out such huge salaries for failures or do they not have to meet any accountability tot he shareholders sans institutions?

	2011	2012	2013	2014	2015
Relevant Numbers (Annual)
Revenues	454.62	526.32	549.17	509.56	221.51
Revenue Growth (YOY)	N/A	N/A	N/A	N/A	N/A
Earnings	24.77	63.32	-250.86	-128.25	-25.12
Earnings Growth (YOY)	167.25	155.57	-496.21	48.88	80.41
Net Margin	5.45	12.03	-45.68	-25.17	-11.34
EPS	2.25	5.85	-23.85	-11.7	-34.35
Return on Equity	5.79	13.33	-66.2	-64.61	-20.15
Return on Assets	3.82	8.47	-29.77	-17.31	-4.76

Don't let the earnings growth fool it it was a contribution of a few 1 time things, there is no light at the end of this tunnel yet but don't take my word for it.

Brian Hanson

"Thanks, Steve. Looking ahead we believe that the exploration landscape throughout 2016 as it impacts our business will be similar to 2015. As commodity prices continue to decline and as many of our E&P customers have still not yet finalized their 2016 budgets, we expect our first quarter to be our weakest with improvement expected in the back half for the year. We believe our current liquidity coupled with the results of our cost reduction initiatives will enable us to continue to weather the storm, we do not expect to see early signs of recovery in the markets we serve until sometime in 2017."

Due to this ugly chart, the cash trouble, over paid insiders, toxic refinancing, the stock pumping, past trouble staying above minimum listing price and a myriad of many other issues you can pick from this is clearly Short not a squeeze there will be bag holders on this. Let the dust settle first and do your own due diligence.