Business Ethics Research Paper

2020 Words Sep 6th, 2010 9 Pages
Insider Trading

By
Jennifer Miller

Instructor
Margie Andrist
Business Ethics

The purpose of this paper is to review the phenomenon of illegal insider trading in the United States financial securities markets. The analysis section of this paper (a) defines illegal insider trading, (b) explains the enforcement of laws and regulations concerning illegal insider trading, (c) review the pattern of illegal insider trading from 1996 through 2005, and (d) compares the problem of illegal insider trading in the United States with the problem in other countries.

Consider this: "Imagine a boardroom of corporate executives, along with their lawyers, accountants, and investment bankers, plotting to take over a public company. The date
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Thus, under current regulations, insider-trading may be attributed to someone not directly affiliated with the firm issuing the stock or with an investment house. It may not be attributed to an individual who profits from nonpublic information, but who has no fiduciary responsibilities, and who does not act in concert with another person who does have such responsibilities.
The securities industry itself attempts to regulate insider-trading through self-policing procedures. The industry’s procedures range from computer tracking of all trades to the maintenance of compliance departments at brokerages to strict codes of ethics. The computer tracking works relatively well; however, the codes of ethics and the compliance departments are less effective.
A key element in the SEC’s effort to control illegal insider trading is the requirement for listed companies to disclose relevant information in their financial reports. The principal objective of the disclosure of financial information is to enable the users of such information to have the opportunity and the capability of making better investment decisions. The purpose is to “assure the public availability in an efficient and reasonable manner on a timely basis of

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