Insider Trading Legal And Illegal Trading Essay

Insider trading can be defined in respect to both legal and illegal trading. The legal type is when corporate insiders—officers, directors, and employees—buy and sell stock in their own companies1.This type of investing is completely legal and usually encouraged by companies to have their employees own their stock. The illegal side of insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading is something that comes up in the media every couple of years and can be confusing to some who don’t have a knack for finance related matters. However, for those who aren’t familiar, this type of trading has been happening for as long as companies have been traded publically. Because there has to be a reason for something to be determined illegal in the United States from the past, court rulings are usually made based on cases from the past which is referred to as stare decisis2.With cases from the past like Strong v. Repide (1909) and Goodwin v. Agassiz (1933) shaping our court decisions in the present, the legality of utilizing insider information for a profit is still very unclear3. Even with monumental court decisions from the past as stated above, the definition of an insider began to gain clarity in the 1930’s. When the market fell in 1929, the Securities and Exchange Commission (SEC) was created shortlyShow MoreRelatedEffects of Illegal Ins ider Trading Essay748 Words   |  3 PagesInsider trading is a term that most investors have heard and usually associate with illegal conduct. But the term actually includes both legal and illegal conduct. The legal version is when corporate insiders—officers, directors, and employees—buy and sell stock in their own companies. When corporate insiders trade in their own securities, they must report their trades to the SEC. Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or otherRead MoreInsider Trading By The Black s Law Dictionary1316 Words   |  6 Pages1.3 INSIDER TRADING The term â€Å"insider trading† is defined by the Black’s Law Dictionary as -â€Å"The use of material non public information in trading the shares of the company by a corporate insider or any other person who owes a fiduciary duty to the company.† Insider trading can be subjected to many definitions and connotations and it encompasses both legal and prohibited activity. Insider trading takes place legally every day, when corporate insiders – officers, directors or employees – buy or sellRead MoreInsider Trading Essay example1149 Words   |  5 PagesInsider Trading The Stock Market is an organized market for the trading of stocks and bonds. In Europe a stock exchange is often called a bourse. Stock exchanges exist in all-important financial centers of the world. Members of an exchange buy and sell for themselves or for others, charging commissions. A stock may be traded only if it is listed on an exchange after having met certain requirements. The New York Stock Exchange (founded 1790) is the largest in the U.S., handling more thanRead MoreInsider Trading Is Unethical?1381 Words   |  6 Pages1. Insider trading is unethical. A person in entrusted to protect confidential information and is expected to understand their responsibility to not divulge that information until such time as it is put out in a public forum. If the information is not put out to the public, then it is that person’s responsibility and obligation to maintain the confidentiality of the information he is privy to. Insider trading is also unfair because it gives someone an unfair advantage by having information aheadRead MoreMark Cuban and Sec1125 Words   |  5 Pagesaccuse Mark Cuban of traditional illegal insider trading, considering he was the largest, individual shareholder of Mamma.com? Even though the information about PIPEs was material inside information, Mark Cuban was not accused as traditional insider information. To qualify as traditional insider trading, there must involve true insiders buying or selling the company’s stock based on material inside information. We need to decide whether Mark Cuban is an insider or not. After buying 600,000 sharesRead MoreInsider Trading And Stock Market1544 Words   |  7 Pagesbelieve that insider trading leads to instability in the market. Economists Julan Du and Shang-Jin Wei suggest that when the market is at higher volatility, insider trading has mainly a part to play in this instability of the market. However, these two economists also believe that many other factors play into the market efficiency and insider trading. Some of these factors include: financial and economic policies, and the maturity of the stock market at the current time that insider trading occurs. Read MoreSocial Implications Of Business Eth ics1601 Words   |  7 Pagesorganisations is to generate profit, if something stands in the way of this, a business may chose to use unethical practises to get around the issue. Ethics in finance can be broken down into different factors such as, bribery, payday loans, insider trading and more. Laws and legislations and business codes of conduct are put into place to prevent unethical behaviour within finance. Below I will be talking about some of these factors within ethics in finance. Bribery – Bribery is one of the mainRead MoreInsider Trading, Stock Market And Other Instruments1308 Words   |  6 Pagescontinue to increase. In recent years, insider dealing as one form of trading that has received considerable interest. The America was the first country to enact insider dealing regulation and also continues to aim the regulation in the world. UK represent legal regime on insider trading also takes the Directive of European Parliament into consideration. In this essay, first briefly point out the basics concepts and the historical development about the laws of insider dealing in the USA and the UnitedRead MoreBusiness Ethics Research Paper2018 Words   |  9 PagesInsider Trading By Jennifer Miller Instructor Margie Andrist Business Ethics The purpose of this paper is to review the phenomenon of illegal insider trading in the United States financial securities markets. The analysis section of this paper (a) defines illegal insider trading, (b) explains the enforcement of laws and regulations concerning illegal insider trading, (c) review the pattern of illegal insider trading from 1996 through 2005, and (d) compares the problem of illegal insiderRead MoreInsider Trading : The Illegal Practice Of Trading On The Stock Exchange1824 Words   |  8 PagesIntroduction Insider trading is defined as ‘the illegal practice of trading on the stock exchange to one s own advantage through having access to confidential information’. Insider trading includes informing others when you have any sort of information involving market trades that has not been made available to the public, this is something that is unfair to other investors. It involves the deliberate exploitation of sensitive price information, obtained through or by privileged relationships;