Effects Of Insider Trading Regulations On The Capital Markets

2916 Words May 11th, 2015 12 Pages
The concern of this paper is the effects of insider trading which constitutes whether to support or to reject insider trading regulations. Whether insider trading should or should not be regulated in the capital markets is a difficult question to answer due to ethical and rational concerns. A suitable answer is an answer that must be sufficient enough to satisfy both types of concerns appropriately. This paper contains three sections to this topic: for regulation, against regulation, as well as a personal critique. Due to the nature of this touchy subject, this topic of insider trading regulations has been one of the most controversial debate ongoing for decades by many intellectual authors. Few of these authors’ insights will be mentioned in order to provide supporting arguments on either sides.
For Regulation As equity investing has evolved into an ever-growing complex system of allocation of resources, with such complexity comes friction regarding regulation. Simply put, there are two sides concerning insider-trading regulations. There are many logical and sensible reasons for pro-regulations as well as against regulation. On the one hand theoretically speaking non-regulation can increase price movement efficiency. On the other hand, there could be disastrous consequences if left unregulated. This is why it’s necessary for a government entity known as the SEC regulates the market. Afterall, one of the primary goals for the SEC would be that equity…
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