2 The Government has insider trading laws that punish individuals who trade in the securities markets using informationthat is not publicly known. Explain how these laws might affect the degree of market efficiency that currently exists inour capital markets.

Insider trading : In simple words, insider trading refers to the practice under which certain…

Answered: The Government has insider trading laws…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 5Q

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Indeed, there is the view that market abuse and insider dealing are not immoral and are victimless crimes. Others stated that insider trading had the capacity to significantly undermine the integrity and efficiency of the relevant securities markets. Do you think that insider trading should be regulated or not by the Government? Do you think that insider trading is occurring in Antigua and Barbuda? Critically discuss.
When does insider trading occur? What government agency is responsible for protecting against the unethical practice of insider trading?
In the 2018 Annual Report of the Securities and Exchange Commission, Ghana, it is stated that “Cryptocurrencies, forex trading, gold collectibles, and other “naked” and “covered” investment schemes were used as underlying instruments to defraud investors. The surveillance system of SEC was able to identify and flag several of such fraudulent investment schemes and quickly alerted the public about them”. Required: What gives the rise of unlicensed financial instruments in the financial system of Ghana? Does the Ghanaian securities’ market have enough regulatory framework to curb the proliferation of Ponzi/Pyramid Schemes in Ghana? Why and why not?
Indeed, there is the view that market abuse and insider dealing are not immoral and are victimless crimes. Others stated that insider trading, had the capacity to significantly undermine the integrity and efficiency of the relevant securities markets. Critically discuss the concept of “insider trading”. Identify and discuss two (2) actual or alleged insider trading that have occurred in the Caribbean. Identify 5 international insider trading cases, critically discussing the mentioned cases and the outcome. Do you think that insider trading should be regulated or not by the Government? Based on your research above, do you think that insider trading is occurring in your country? Critically discuss.
If an investment bank offers both underwriting/distribution functions and investment advisory or management functions, which situation would be acceptable under U.S. Securities and Exchange regulations and ethics guidelines with regard to material non-public information (MNPI)? Allowing MNPI acquired in the sell side of the business to influence the recommendations made by the buy side of the business. Trading of personal securities based on MNPI available only to the buy side of the business and not to the sell side due to a "wall." "Bringing someone over the wall" to provide value to underwriting, who does not comment on MNPI until it has been made public. Acquiring MNPI in the buy side of the business and disseminating it to the sell side of the business.
Wall Street firms have traditionally compensated their traders with a share of the trading profits that they generated. How might this practice have affected traders’ willingness to assume risk? What is the agency problem this practice engendered?
What unfortunate lesson did the auditors learn from the situation in the Unregistered Sale of Securities case? What should auditors do when a violation of U.S. securities laws is suspected?
What is the tax advantages and tax disadvantages of Sarbanes-Oxley in relations to the extent to which increased regulation is helpful in preventing fraud, and to analyze the point at which it becomes counter-productive – particularly for small businesses.
Which among the following is not an objective of Whistleblowing? a. To protect Public Interest b. To take action against those who are wrongdoing c. To expose the Corruption d. To educate the investors to invest in the company’s share
In 1996, allegations were made against Moody’s that it was issuing ratings on bonds it had not been hired to rate, in order to pressure issuers to pay for their service. How has the increasing availability and use of the internet impacted the ability of stock traders to act unethically?
Which of the following statements is INCORRECT ? Large investment banks finance most of their activities by using retail consumer deposits as the primary source of funds. Failure to monitor the actions of firms in a timely and complete fashion after purchasing securities in the firms exposes investors to agency costs. As a delegated monitor, a financial institution's actions reduce agency costs. Financial institutions provide economies of scale in transaction costs
Before entering a formal agreement, investment banks carefully investigatethe companies whose securities they underwrite; this is especially true of theissues of firms going public for the first time. Because the banks do not themselves plan to hold the securities but intend to sell them to others as soon aspossible, why are they so concerned about making careful investigations?

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The Government has insider trading laws that punish individuals who trade in the securities markets using informatic that is not publicly known. Explain how these laws might affect the degree of market efficiency that currently exists ir our capital markets.