insider trading
Insider trading describes any transactions in securities such as stocks and shares by persons having access to privileged information not available to the general investing public, and who stand a financial gain from this knowledge. Strictly speaking, the term 'insider' refers to someone who owes a fiduciary duty to a corporation and its current and potential shareholders. This term, however, has occasionally been expanded to include a wide range of persons with informational advantages, such as third parties with trade relationships with a corporation (e.g. trade suppliers, subcontractors), security analysts to whom information has been disclosed selectively, and even persons who accidentally acquired a piece of non-public information. Yet, the latter view fails to incorporate the situation that the informational advantages can be properly obtained. This is particularly important as this setting may involve the securities analysts who are typically viewed as the key force i!n keeping the market efficient. Nonetheless, the two contexts of insider trading and selective disclosure should be sharply distinguished and separately addressed by the law. Traditionally, much of the regulation of insider trading has
2.1 GENERAL ISSUES ON CORPORATE INSIDER TRADING Additionally, another factor that makes it impossible for firms to achieve optimal allocation of the property rights in information is the actual difficulty of enforcing the appropriate contracts. Insiders' trades are notoriously hard to detect, for a trader can disguise his identity by using a street name. If firms seeking to curtail insider trading by contract can not enforce their choices, then all the benefits can be lost. On the other hand, firms that gain from restrictions can not distinguish themselves (in investors' eye) because other firms will disingenuously claim to be similarly restrictive. Firms might attempt to overcome this by requiring insiders to report their trades and auditing their tax returns. Yet, such devices are imperfect as insiders can provide valuable information to family members or others and avoid detection. In addition, although firms may try to detect trades by entering into agreements with stock exchanges that have computer surveillance of trad! · S. F. FROWHEN AND F. P. MACHUGH, FINANCIAL DECISION-MAKING AND MORAL RESPONSIBILITY, ST. MARTIN'S PRESS, 1995.
Some common words found in the essay are:
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Approximate Word count = 6195
Approximate Pages = 25 (250 words per page double spaced)
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