Insider Trading Is Unethical?

Fraud, lying, conspiracy...not terms that any individual generally wants associated with their history, nonetheless with their reputation and personality, especially if that individual happens to be Martha Stewart. Martha Stewart: a name which almost every person who calls themselves an American can recognize. Her name pronounces itself across cookbooks, magazines and even has its own show on Style and The Learning Channel. It now pronounces itself with yet another captivating theme, as part of one of America's major scandals.

Overview of the Case: The Securities and Exchange Commission claims Mark D. Begelman misused proprietary information regarding the merger of Bluegreen Corporation with BFC Financial Corporation. Mr. Begelman allegedly learned of the acquisition through a network of professional connections known as the World Presidents’ Organization (Maglich). Members of this organization freely share non-public business information with other members in confidence; however, Mr. Begelman allegedly did not abide by the organization’s mandate of secrecy and leveraged private information into a lucrative security transaction. As stated in the summary of the case by the SEC, “Mark D. Begelman, a member of the World Presidents’ Organization (“WPO”), abused

Insider trading – insider trading is the trading of a corporation’s stock or other securities by individuals with potential access to non-public information about the

1. Openness and Transparency. In the textbook, transparency represents providing clear and equal access of material company information on a regular basis to all investors to allow for informed investment decisions and the ongoing monitoring of the company’s activities. The Satyam scandal erupted when its founder and chairman admitted falsifying accounts of over $1 billion. As the details of what happened unfold, the need for openness and transparency comes into sharp focus.

Under Armour has a big section in their code of conducts document stating what can be considered insider trading and what the consequences can be if you are involved in it. “It states that it is illegal for you to buy or sell stock or other securities of Under Armour or any company with which we do business while you are in possession of material nonpublic information. It is also illegal for you to disclose such information to anyone else, including members of your immediate family or household, who might buy or sell securities in response to such information, or to suggest to anyone else that they buy or sell securities of the relevant company,” (Under Armour Code of Conduct). Under Armour also states that if employees are involved in this

In addition to the thorough explanation about the fundamental concepts of insider dealings, the law also provides detailed statements about some common scenarios of insider dealings which are not regarded as market misconduct, interest in securities, penalties and general defenses.

Certain proclamations in this press discharge may be advance looking in nature or "forward looking articulations" as characterized in the Private Securities Litigation Reform Act of 1995. The forward looking comments held in this press discharge are liable to various dangers, patterns and questionable matters that could cause true execution to contrast tangibly from these forward looking articulations. Various those dangers, patterns and questionable matters are talked over in every organization's Sec

Ethically, scanning the company’s website should not be performed unless asked or permission has been given; doing so could in fact cause unintended harm and/or may be a cause for termination. Although the scan may have been performed as a learning exercise, a company may not view it that way, especially since rogue employees aren’t uncommon, and a disgruntle employee could do just as much, if not more damage than a hacker. According to John Pescatore, director of emerging security trends at SANS Institute, rogue insiders can cause more damage than outside hackers because they are harder to detect (Smith, 2013). The FBI warned companies about the rise in hacking performed by current and former employees.

Harriet has come across a very difficult ethical discussion. If she is to trade based on the information from the grapevine, she will greatly benefit herself. If she is not to trade based on the inside information, she will not benefit for this even though her accounting position puts her at an advantage. It would be unethical to trade based on insider information that is not shared to the public yet. If she wants to trade after this new information is shared to the public, then it is ethical because it is no longer insider trading.

their right to receive cash at precisely the time that Arley's stock is low, which is also when the firm

For example, Manna (1966) states that insider trading should be allowed because insider trading is the most effective way to compensate to insider to generate new economic information in firm. Hirshleifer() states that for insider, good information is as good as bad information to make profit but this profit may not be related to economic contribution of insiders in corporate. Proponents of insider trading suggest (Carlton and Fischel (1983) that insiders are the most informative member in the market, and by trading, they bring new information to the markets and causing prices to change toward their true value and, therefore, promoting the optimal allocation of resources. On the other hand, Scholars (Benabou and Laroqu, 1992) say that insider trading may provide incentive to corporate insiders either to delay the announcement of price-sensitive information to public or to prevent to release price sensitive information, which in turn makes stock prices less informative. However, Georgakopoulos (1993) argues that restriction on insider trading may have little adverse impact on market efficiency but it reduces the cost of transaction that burdens on uninformed traders

The first part of the essay will be focusing on three categories of IC. Then, it will be discussing the relationship between IC and Market-to-book ratios. Next, it will be focusing on the future benefit of voluntary disclosure.

| * David should not disclose confidential information outside the firm. * If he seeks advice from his friend Peter, he will breach S140.1 & S140.5. * Peter can trade this information to benefit him – affecting MAL.

Insider trading refers to the trading of a listed company’s stock or other financial securities by individuals who has access to non-public material information about the company. This action often occurs within employees/ex-employees of the listen company. Information is considered to be non-public material information if making it public would affect the price of securities, and using such information in decisions to buy or sell financial securities would be unfair to non-insiders (Bainbridge, 2013). Insider trading is treated as a mischief in more than 90 countries, and defendants are imposed with penalties (Beny, 2012). Specific insider conduct regulations in New Zealand were first enacted in 1988, followed by amendments in 2002, 2006 and 2008. The insider conduct regimes between 1988 and 2008 are often considered as a failure due to weak enforcements. Thus in 2008, the regulator introduced a new regime, which was a close model to the Australian insider conduct legislation. Both regimes are expansive, meaning it could be applied to any person in possession of insider information. However, while the Australian laws were aggressively enforced (more than 26 prosecutions were brought since then), no prosecutions have been launched under the new legislation in New Zealand. In addition, New Zealand also had no convictions secured prior to 2008, illustrating a clear enforcement deficit in the New Zealand

Stakeholders can be defined as a person, group, organization, or system that affects or can be affected by an organization’s actions. Examples of stakeholders in accounting are; owners, suppliers, customers, government, employees, creditors, and labor unions. These people are classified into four categories; Capital Market, Product or Service Market, Government, and Internal Stakeholders. Capital Market Stakeholders provide the major financing for the business to begin and continue its operations. Some examples of the stakeholders are banks and owners. Product or Service Market Stakeholders are buyers of products or services and vendors to the business. Examples of Product or service market