Insider Trading case study group project

1. Insider
Trading
Group Assignment
March 23,2022

2. Insider trading
regulations and their
implications
01 Introduction
02 Legal Implications
03 Ethical Implications
04 Economic Social Implications
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3. 01
Introduction
Insider trading is defined as trading in a
publicly listed company's stock by
someone with non-public, material
information about that stock. Insider
trading can be either illegal or legal,
depending on when the trade is made.
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4. 02
Legal Implications

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• Insiders are subject to insider trading
laws, which affect the sale and purchase
of the Company's stock.
• Insiders may obtain material nonpublic
information about the Company or other
companies while conducting business for
the Company.
• Insiders may be sued civilly by the
Securities and Exchange Commission
("SEC") or private litigants if they trade in
securities while in possession of material
nonpublic information about the issuer of
the securities.
• They may also face criminal charges.
Insider Trading Policy. (n.d.). INSIDER TRADING POLICY. INSIDER TRADING POLICY; www.sec.gov. Retrieved March 14, 2022, from
https://www.sec.gov/Archives/edgar/data/1164964/000101968715004168/globalfuture_8k-ex9904.htm

6. 03
Ethical Implications

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A major argument against insider trading is
that it is unfair and discourages ordinary
people from participating in markets, making
it more difficult for companies to raise capital
(Sebastian, 2022). Beyond being illegal
insider trading presents several ethical
issues. Some of these issues include;
• Fairness – Competition should be fair
within the market. Insider traders negate
this.
• Exploitation – exploiting relationships and
the market in general to win.
• Harmful – it harms the market and its
players by creating a false economy.
Sebastian, A. (2022). Arguments for and Against Insider Trading. Retrieved from https://www.investopedia.com/articles/markets-
economy/092216/why-insider-trading-bad-financial-markets.asp

8. 04
Economic - Social Implications

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Even though all "insider traders" claim that
their offences are "victimless," numerous
individuals will therefore suffer as a result of
their actions in the long run. This is truly the
case, even though all the accused "insider
traders" claim that their crimes aren't worth
talking about (Shane Smith Law, 2022).
Shane Smith Law. (2022, February 10). The Types of Harm Caused by Insider Trading | Shane Smith Law. Shane Smith Law;
www.shanesmithlaw.com. https://www.shanesmithlaw.com/library/the-types-of-harm-caused-by-insider-trading.cfm
• Damage can be caused to a corporation’s public image and reputation.
Since it's often hard to learn how many shareholders were aware of the
insider-trading information, many people may arguably become much more
hesitant to do business with a specific corporation after it’s been involved in
this type of event;
• During the time when insiders are sharing their confidential information,
they’re causing damage to the market’s efficiency because prices can’t
respond with the normal ebb and flow of new information being made public;
• The market’s general reputation usually suffers. Many shareholders – and
others simply contemplating getting involved in the market – are very likely
to postpone future dealings with Wall Street out of new fears of being
cheated;