Pros And Cons Of Insider Trading

1. Why didn’t the SEC accuse Mark Cuban of traditional illegal insider trading, considering he was the largest, individual shareholder of Mamma.com?

We do not exchange economic benefits of any inside information if we are not sure if it is sensitive information or what action should be taken, we can seek the advice of legal services and compliance.

I find this to be quite an interesting fact. The insiders need to be very careful what they discuss outside of the office.

Corporate insiders must act in good faith and in a manner that they reasonably believe will be in the best interest of the corporation including safeguarding corporate information. Also they have a duty to care for the corporation as they would their own. So in this case, the insider who has to be loyal to his company and may not be able to go to the authorities with information that can damage the company’s reputation also has to care for this same company and in caring means if there is anything unethical going on should be able to whistle blow it, however this creates conflict for the insider. It’s like they are stuck in between, however way you look at, whether they report it or not, they are damned as the book stated because once authorities know, the company might suffer public humiliation and if they don’t report it, the company eventually will collapse due to everything blowing up just like Enron.

Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) by individuals with access to nonpublic information about the company. In various countries, trading based on insider information is illegal. A great example for that is when “R. Foster Winans: The Corruptible Columnist Although not high-ranking in terms of dollars, the case of Wall Street Journal columnist R. Foster Winans is a landmark case for its curious outcome. Winans wrote the "Heard on the Street" column profiling a certain stock. The stocks featured in the column often went up or down according to Winans' opinion. Winans leaked the contents of his column to a group of stockbrokers, who used the tip to take up positions in

How could this small breech of ethics be harmful to the productivity of the company? Give two examples of problems this could cause. It could cause other employees to quit, or it could lower the company’s

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

With the Martha Stewart scandal her actions initially saved her $45,673 but in the end did it really help? She ended up serving less than a year in prison and was fined $250,000. In hind sight she ended up losing a lot more money from selling the stocks and lying about it then if she would have just kept the stocks and took the hit when ImClone’s value fell. But selling stocks based on inside information so you’re sure you don’t lose money in an investment; doesn’t that seem like the right thing to do? No one ever wants to lose money especially in an investment, but avoiding a loss by selling stock the way Martha Stewart did is considered illegal. Having inside knowledge of a company and using that knowledge to make moves before the market price changes at that time probably seemed like a great idea but is profoundly illegal and known as inside trading. Martha Stewart was and is a well-known business woman and at that time served as President, CEO and chairwoman of her publicly traded company. She was educated and knowledgeable about what is allowed or not allowed as far as selling, buying and trading stocks. Her understanding of SEC regulations is especially disconcerting since she had been a part of the board of directors of the New York Stock Exchange. Martha was aware of the consequences that came with breaking the rules. Not only did she participate in insider trading and benefited from it but she also tried to cover it up claiming she and her stock broker

This is called insider trading and is one of the acts that the SEC is responsible for stopping. One of the most famous cases occurred in late 2001 in which one of America’s most famous woman was arrested. This person was Martha Stewart someone who everyone in America has seen on T.V. countless times. Stewart who owned four thousand shares of ImClone stock was imprisoned for five months after being found guilty of insider trading by the SEC. The C.E.O of the company ImClone, Sam Waksal was found to be the main culprit in the case. Waksal discovered that his company would be taking a huge hit in the stock market. The C.E.O urged his broker to sell the stock because if he were too keep it would have lost hundreds of thousands of dollars. When asking his broker to dump the stock a natural instinct took over and the broker knew that something was going to happen to the company forcing its stock to drop. Waksal and Stewart however shared the same broker, when the news was conveyed to the broker Martha was urged to sell her stocks. After she did the SEC charged her with insider trading for selling her stock with illegal information. Even though Martha did not directly receive the information she still used critical information that was only available to a select few in her favor. This forced the SEC to carry out its purpose and maintain fair, orderly, and efficient

Looking at the case of the United States v. O’Hagan, 521 U. S. 642-652 (1997) it points out how fraud and how O’Hagan violated § 10(b) of the Security Exchange Act of 1934 and the SEC Rule 10b-5 by allowing misappropriate trading practices. With O’Hagan breaking the rules it leads to direct consequences of all the laws that are governed by the SEC which they often persecute whoever should break them. It also gives us knowledge on why those rules are important and need to abide by them. Rule 14e-3(a) is something that also gives important information on how insider trading is supposed to by introduce within the business world. Rule 14e-3(a) forbids anyone to trade based on material, nonpublic information that concerns a tender offer and that the person knows or should know that it has been acquired by an insider of the offeror or issuer, or someone working their behalf, unless within a reasonable time before any purchase or sale such material and it source are publicly disclosed (United States v. O'Hagan, 521 U.S. 642

Jabil Circuit Inc. is a publicly traded electronics and technology company who has been excused by their shareholders for insider trading by not reporting they're backdating information. Backdating is not illegal as long as it is reported but unfortunately Jabil Circuit Inc. wasn't reporting. Insider trading is “ the purchase or sale of securities on the basis of information that has not been made available to pubic” (652). With that being said Jabil Circuit Inc. was being tried for SEC rule 10b-5.

Firstly there is a significant Ethical and morale lapse in a share floated company when the CEO engages in related party transactions. The moral issues arise

S.183 states, “a Director of a corporation must not improperly use the information to gain an advantage for themselves or someone else” (slides). In this case of Vidler, the courts found there was a breach of s.183 as Vidler had used company information gained as a director to invest in shares to make profit for himself. Similar but different to this case, Patricia has breached s.183 of the CA as she has improperly used company information to gain advantage for someone else through advising her sister to buy shares in order to make a profit.

If there is one thing to avoid while being a stockbroker it is fraud! Fraud is simply the deliberate trickery of deceit in order to obtain a profit or dishonest advantage over someone. In each brokerage firm there are a select few of individuals that operate under the Securities and Exchange Commission (SEC) to oversee the legal and illegal activities of a corporation. Jordan Belfort was responsible for training his employees to intentionally lie to clients as a means of earning substantial amounts of money. For

The laws restricting insider trading define "inside information" as information that is both "material" and "nonpublic." Material information includes any information that is public.