Alyousif Name :Mohammed Alyousif Professor: Conne Farrel Course:ENG-100 Date: 11/6/2016 Use of Blackout Periods to Curb Insider Trading A couple of years back in 2012 a Manhattan office linked to the United States Attorney initiated criminal investigations to establish whether corporate executives from a list comprising of seven different companies engaged in insider trading by trading shares of their own company’s stock. Since then, it is uncommon to pick up a newspaper and miss an insider trading investigation. At a time when a former Yahoo executive pleaded guilty of committing a securities fraud, another trial was underway involving the director of Goldman Sachs who was accused of leaking insider information of both Procter & Gamble and Goldman Sachs to a friend. In addition, former hedge fund Raj Rajaratnam has been convicted for insider trading proving that Securities and Exchange Commission is putting a lot of effort in investigating and prosecuting cases of insider trading. However, this does not help restore investor confidence in the financial sector. Some other corporate level strategies should be instituted to prevent governmental interventions in the issue. One such appropriate way is use of “blackout periods” to check flow of sensitive information during trading periods. In all manner and fashion insider trading undermine investor confidence in relation to integrity and fairness of the securities market. Because of this, all jurisdictions around the world have legislations dealing with insider trading. Undisputedly, the United States has been the longest serving victim of the issue of insider trading. Most of the studies carried out on the issue are carried out in the US and some of the toughest legislations formed to deal with the matter originate from the United States of America (CFA Institute 4). Inside trading has a huge influence in the American financial market and other markets around the world. The concept of insider trading has two major adverse effects. First, it injures investors by undermining their confidence regarding the financial markets of a company, country or a state. Regarding investors, inside trading makes them trade at a “wrong price.” In other words, an investor is duped to make a bad purchase or sale. Even though, this type of effect has been down played it has significant impacts on the change of perception of investors in any particular securities market. Secondly, inside trading injures Issuers this is because it will delay corporate plans by delaying transmission of information to provide sufficient time for manipulation of stock prices (Anderson 358). As a result, a company in question suffers massive reputation damage when the issue becomes common knowledge. In addition, insider trading is plain theft. Therefore, inside trading is an issue to be addressed not only by the regulatory frameworks provided by the legislative bodies but also individual corporate initiatives. Form the statist.

1. Alyousif
Name :Mohammed Alyousif
Professor: Conne Farrel
Course:ENG-100
Date: 11/6/2016
Use of Blackout Periods to Curb Insider Trading
A couple of years back in 2012 a Manhattan office linked to the
United States Attorney initiated criminal investigations to
establish whether corporate executives from a list comprising of
seven different companies engaged in insider trading by trading
shares of their own company’s stock. Since then, it is
uncommon to pick up a newspaper and miss an insider trading
investigation. At a time when a former Yahoo executive pleaded
guilty of committing a securities fraud, another trial was
underway involving the director of Goldman Sachs who was
accused of leaking insider information of both Procter &
Gamble and Goldman Sachs to a friend.
In addition, former hedge fund Raj Rajaratnam has been
convicted for insider trading proving that Securities and
Exchange Commission is putting a lot of effort in investigating
and prosecuting cases of insider trading. However, this does not
help restore investor confidence in the financial sector. Some
other corporate level strategies should be instituted to prevent
governmental interventions in the issue. One such appropriate
way is use of “blackout periods” to check flow of sensitive
information during trading periods.
In all manner and fashion insider trading undermine investor
confidence in relation to integrity and fairness of the securities
market. Because of this, all jurisdictions around the world have
legislations dealing with insider trading. Undisputedly, the
United States has been the longest serving victim of the issue of
insider trading. Most of the studies carried out on the issue are
carried out in the US and some of the toughest legislations

2. formed to deal with the matter originate from the United States
of America (CFA Institute 4). Inside trading has a huge
influence in the American financial market and other markets
around the world.
The concept of insider trading has two major adverse effects.
First, it injures investors by undermining their confidence
regarding the financial markets of a company, country or a
state. Regarding investors, inside trading makes them trade at a
“wrong price.” In other words, an investor is duped to make a
bad purchase or sale. Even though, this type of effect has been
down played it has significant impacts on the change of
perception of investors in any particular securities market.
Secondly, inside trading injures Issuers this is because it will
delay corporate plans by delaying transmission of information
to provide sufficient time for manipulation of stock prices
(Anderson 358). As a result, a company in question suffers
massive reputation damage when the issue becomes common
knowledge.
In addition, insider trading is plain theft. Therefore, inside
trading is an issue to be addressed not only by the regulatory
frameworks provided by the legislative bodies but also
individual corporate initiatives. Form the statistics in figure 1
it is evident that even though financial market crimes are
reducing the figures are still alarming. Companies all over the
world have developed strategies for curbing insider trading
within their management team. These strategies aim at reducing
interventions by regulatory bodies such as SEC. Some of these
strategies include ethical training programmes that aim at
helping employees to avoid activities that would be termed as
inside trading. However, one strategy stands out, that is “quiet
moments” and “blackout periods.”
Use of windows, quiet moments and blackouts is an appropriate
strategy in dealing with the problem of insider trading.
Companies that have not institutionalised this method should
consider it because of various compelling reasons. For instance,
the strategy is preventive in nature, as a result, it minimises the

3. chances of dealing with regulatory authorities in a lawsuit.
Another reason is the fact that it helps reinforce investor
confidence, because all interested parties are given a level
playing ground. This strategy requires that regular windows
should exist when directors, officers and employees of a
company are kept in the dark regarding trading information.
In the modern financial markets many companies voluntarily
create, “blackout periods” these periods commence at the end of
a quarter and continues through a quarters’ earnings
announcement (Polk 1). Therefore, the concept of blackout
periods simply implies that certain officers or management
staffs of a company have regular access to non-public
information. Therefore, to curb insider trading a company
should institute additional precautionary procedures that govern
when people that have access to such kind of information should
trade (Lanin and Daniela 5).
This strategy only allows individuals categorised as insiders to
trade during an open window period. At this particular point, it
is more unlikely that insiders possess vital material non-public
information that can assist them to trade unfairly (Polk 3).
However, several scholars doubt the effectiveness of blackout
periods in controlling insider trading. It is argued that insiders
do not restrict themselves during the blackout periods. It is
merely a paper requirement that they should not trade before an
open window is announced. In addition, there are no
mechanisms of knowing whether an insider has been exposed to
material non-public information (Polk 4). There is also an issue
regarding the scope of definition of who an insider is and
insider information. As a result, various suggestions have been
put across that aim at dealing with insider trading in other ways
other than legal interventions. Some of these suggestions
include use of pre-arranged schedules for insiders to buy stocks
and overlook the whole idea of insider trading. However, there
are facts proving that “blackout periods” is the most effective
way to prevent insiders from unfairly trading. This is because
periods when insiders can be prevented from trading are flexible

4. and can be adjusted as need arises before an open window is
reached. Just as a demonstration of the strength of “quiet
moments” in dealing with insider trading. There are designated
quarterly “blackout periods” (Foley, Sean, Amy, Thomas and
Richard 29). These are routine quite moments that are linked to
a company’s quarterly release of financial results.
Primarily these periods are designed to keep insiders out of
business when they are likely to possess information pertaining
earnings of a company. In addition, to this there is event
specific “blackouts periods” these are moments that are not
linked to a company’s financial reporting cycle. These types of
blackout are initiated when a company is facing a situation that
complicates confidentiality of material non-public information
(Lanin and Daniela 5). Some of these situations include legal
proceedings, sales release and product developments,
acquisitions and joint ventures can warrant event specific
blackouts. Another advantage of this strategy is the fact that
the list of people regarded as insiders can be increased in the
event that a group of insiders is not clearly defined.
From the above analysis, it is safe to argue that “blackout
periods” is an important tool for fighting insider trading. It is
true that when it is not implemented appropriately its
effectiveness significantly reduces (Lanin and Daniela 4).
Prevention of insider trading at the corporate level is important
for reducing headlines of insider trading frauds. Companies
should be keen on when to uplift or do away with a “blackout
period” this should only happen when all financial information
has been released to the public and the securities market
targeted has had an opportunity to review the information. All
factors considered it is possible to reduce insider trading among
companies significantly.
In general, it is important to take care of insider trading
issue before they escalate to a national level. This will help in
maintaining long-term strong reputational image of a company
due to absence of insider trading issues. There are weaknesses
that are displayed by the “blackout period” strategy. Some of

5. these issues include, lack of sufficient description of an insider
and insider information. There is also lack of a standard
measure of how much an insider knows regarding a pending
stock exchange. However, there are remedies to these situations,
first a company can decide to increase its list of targeted
insiders depending on their speculation and extend the
“blackout periods” so that nothing is left to chance. This
strategy depends entirely on the spirit and willingness of a
company to eliminate insider trading in today’s financial
markets. In addition, it prevents costs that are associated with
legal proceedings that are attracted with insider trading.
Therefore, in order to reduce national level intervention in the
fight against insider trading all companies should consider the
use of “blackout periods” to stop insider trading.
Work Cited
Anderson, John P. “Anticipating a Sea Change for Insider
Trading Law: From Trading Plan Crisis to Rational Reform.”
2014.
CFA Institute. Literature review on Insider Trading and Insider

6. Trading Regulation. 2013.
Foley, Sean, Amy Kwan, Thomas H. McInish, and Richard
Philip. “Director Discretion and Insider Trading Profitability.”
Pacific-basin Finance Journal 39 (2016): 28-43.
Federal Bureau of Investigation. Financial Crimes Report 2010-
2011. Federal Bureau of Investigation. 5th November 2016.
Lanin, Ari В., and Daniela L. Stolman. “Building a Better
Insider Trading Compliance Program.” Insights, 25.3 (2011): 1-
9.
Polk, D. “Securities offerings during blackout periods and
following quarter-end: What you need to know.” Harvard Law
School Forum on Corporate Governance and Financial
Regulation, 2012.
Sust-04 two pages discussion and two response letter
Discussion Title: Creating Greener Products
Share another strategy for sustainable design we have not
touched on. In your responses to colleagues, give a specific
example of how one of the design strategies posted by a
classmate is supported by, or supports, ecological economics
and/or systems thinking
Share another strategy for sustainable design we have not
touched on. In your responses to colleagues, give a specific
example of how one of the design strategies posted by a
classmate is supported by, or supports, ecological economics
and/or systems thinking.
Here we go!
Looking back to Module 3 we reviewed the environmental
regulations which surround the designing and production of
products. In modules 2 and 3 we addressed the importance of
leadership initiative as well as compliance with environmental
regulations.
We are now moving into Module 4! Module 4 launches our
review of green production. This module will explore specific

7. green design and manufacturing frameworks. Our three
objectives this week include: •Discuss key sustainability design
frameworks •Evaluate the changing nature of green products
•Identify potential opportunities and liabilities in "greening" a
company’s products
Assignment! This week you will review The article “Green
Product Design”. The article was written eight years ago, and
while its key concepts are still correct, are all of its
conclusions? Research one of its conclusions and share how it
may have changed in the intervening years. Write a short
analysis paper that summarizes your findings. (Check out the
short paper rubric- aim for 2-3 pages of content in your words).
Team Project- Make sure to review the frameworks provided
and work with your team to select an appropriate framework and
suggest how your company can integrate the framework into
their business. If the company has already integrated the
framework, describe how they have done so and the results.
Integrate the results of your work into Memo 2 of the project.
Check out this video to open the week:The Myth of
"Environmental Sustainability" | Justin Mog | TEDxUofL.
Retrieved from https://youtu.be/nqBMg__fRm8