Insider Trading
Abstract
Our era aptly has been styled, and well may be remembered as, the "age of information.
"Francis Bacon recognized nearly 400 years ago that "knowledge is power," (Nickels &,McHugh 2011) “Insider trading is an unethical activity in which insiders use private company information to further their own fortunes or those of their families or friends”. Pg.101 Insider trading is a term that 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. Illegal 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. (Agnello & Donnelley 1975) Stated if every member of a community has unlimited access to the resources of the community, then the community 's resources soon will be used up unless they happen to be available in infinite supply. The system of private ownership of assets, by contrast, effectively can use the price system to ration the assets in such a way as to preserve them properly and to benefit all members of the community. pg. 521
The Insider Trading Debate
Arthur Levitt stated in 1998 that more Americans were investing in the stock market than ever before and Americans had almost twice as much money invested in the stock market as in commercial banks.
The illegal version of insider trading most of us think of; is the type of insider trading that achieved wide-spread in the 1980’s with the SEC 's civil cases and the United States Department of Justice 's criminal cases against Michael Milken and Ivan Boesky which inspired even Hollywood 's imagination with the movie "Wall Street". It is the trading that takes place when those privileged with confidential information about important events use the special advantage of that knowledge to reap profits or avoid losses on the stock
Our era aptly has been styled, and well may be remembered as, the "age of information.
"Francis Bacon recognized nearly 400 years ago that "knowledge is power," (Nickels &,McHugh 2011) “Insider trading is an unethical activity in which insiders use private company information to further their own fortunes or those of their families or friends”. Pg.101 Insider trading is a term that 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. Illegal 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. (Agnello & Donnelley 1975) Stated if every member of a community has unlimited access to the resources of the community, then the community 's resources soon will be used up unless they happen to be available in infinite supply. The system of private ownership of assets, by contrast, effectively can use the price system to ration the assets in such a way as to preserve them properly and to benefit all members of the community. pg. 521
The Insider Trading Debate
Arthur Levitt stated in 1998 that more Americans were investing in the stock market than ever before and Americans had almost twice as much money invested in the stock market as in commercial banks.
The illegal version of insider trading most of us think of; is the type of insider trading that achieved wide-spread in the 1980’s with the SEC 's civil cases and the United States Department of Justice 's criminal cases against Michael Milken and Ivan Boesky which inspired even Hollywood 's imagination with the movie "Wall Street". It is the trading that takes place when those privileged with confidential information about important events use the special advantage of that knowledge to reap profits or avoid losses on the stock
References: & ECON. (1975) pg. 521 Easterbrook, Insider Trading as an Agency Problem, in PRINCIPALS AND AGENTS: THE STRUCTURE OF BUSINESS (Pratt & Zeckhauser eds Understanding Business Nickels, McHugh, McHugh pg. 101 United States Attorney Southern District of New York (2011), U.S United States District Court Southern District Of New York (2012): Retrieved from: http://www.nysd.uscourts.gov/ U.S Securities and Exchange Commission (2012): Retrieved from: http://www.sec.gov/answers/insider.htm