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Insider Trading Arguments

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The problem with punishing those involved with insider trading is being able to prove the conviction. It is hard to determine what is proprietary research and what is insider information. Although there are some clear examples of insider trading where there is proof in emails of disclosing inside information or documentation of plans to trade based on certain private information, there is usually no distinct answer to whether it was research or inside information. For example, if a group of people visit every Home Depot in the area every day to talk to managers, count customer traffic, interview customers in the parking lot, and observe the daily activities, they could come to the conclusion that sales are continually increasing on a month-to-month …show more content…

The main arguments against it include making the market unfair to those outside of the firm, the potential for many investors to leave the market based on their perceived disadvantage, and the rightful duty to punish all those involved with scamming others. Although reasonable, these arguments are not necessarily correct. Insider trading actually benefits the economy as a whole by making stock prices more in equilibrium to their true value, it helps minimize potential losses to individual investors who want to buy, and the immense amount of resources is not worth trying to prove something that cannot fully be enforced. Maybe there should be some type of balance between legal and illegal insider trading. By making it completely legal, enforcing insiders to report or disclose that they are insiders may help the unfair and negative connotation insider trading is associated with. This would make both sides more transparent during transactions and be able to see how insiders are acting in the market. In every area of life, something is going to have the advantage in some way. There is no way to avoid that. Ultimately the stock market depends on how investors will act to the information that is available to them. This information can be given through public announcements or can be observed through insiders’ transactions. Either way, information needs to get to the market and insider trading is one way to achieve that quickly. Whether it is illegal or not, insider trading is going to exist in the market whether it be by means of inaction or even unintentionally. For those who do have access to insider information, they should ethically and morally abide by the existing confidentially agreements associated with the firm they are involved with but that is a more civil, individual matter – not a criminal

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104 Words | 1 Pages

It is very hard to say that SOX would prevented the scandal but they would have being exposed sooner because of the Sarbanes-Oxley section and titles rules and regulation such as; Titles II the auditors partner rotation; Title III, the responsibility or reporting accurate financial corporate reports. They reported depreciation expenses of garbage trucks as a salvage values, and subjective to other assets that did not have any value. Title IV the financial disclosures of financial reports was overstated or understated in some reports to inflates a high profit margin. The Titles VIII, the alteration and destruction of records that would protect the

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744 Words | 3 Pages

One example of this unethical way of business, was his way of acquiring “Allegheny Steel Company.” The company was beginning to become quite the competitor, using a new method that allowed the efficient, and effective production of steel. The company’s new method was so successful, they were able to undercut Carnegie’s own prices. However, Carnegie began spreading false rumors of the steel being manufactured by Allegheny Steel Company, implying it was ineffective, spreading alarm to their buyers. He was able to hurt their company and take the the reins.

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518 Words | 3 Pages

A bailout is a guarantee release of a person arrested by providing money with the bail. Likewise, bail bond is a warranty, used to obtain the approval of a criminal defendant who is required to release the bail. The following individuals have the highest bail bonds/bailouts ever: Michael Milken was on the $ 250 million bond list; that was the huge amount that American business magnate Michael Milken was placed on has his bail out prison.

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71 Words | 1 Pages

The financial scandals in early 2000s caused the Sarbanes-Oxley Act of 2002 to be created. Enron, WorldCom and the accounting firm, Arthur Andersen, to intentionally mislead their shareholders by exaggerating their profits and understating their expenses. The scandals had raised the importance of internal control for enhancing corporate governance. Therefore, the government established the SOX to protect the interest of the investors and employees and to monitor the companies and auditors.

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348 Words | 2 Pages

Martha Stewart was hold under suspicion for insider trading however she was never charged for illegal inside trading. Although, the government tried to make case. She was hold under suspicion because she had sold her stock shares ImClone due to her broker’s advisement Peter Bacanovic allegedly. Martha accused on eight different counts conspiracy, obstruction of justice, and making false statements. The question is whether Martha Stewart really break the law?

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671 Words | 3 Pages

One example was the Credit Mobilier scandal where major stockholders of the Union Pacific Railroad formed the Credit Mobilier company and sold their shares to influential congressmen. These executives essentially hired themselves and stole taxpayer money, a very lucrative scandal. Scandals like the Credit Mobilier were widespread and executives from many other railroad companies often stole from their own companies. Many executives would manipulate the rail companies' stocks to profit greatly. Executives would often bribe influential politicians, and work together to profit themselves.

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318 Words | 2 Pages

***Type your essay on the blank doc I have provided in Google Classroom. Keep this window open so you can refer back to it as you write. *** Due Date: Your final draft is due on Friday. If you are absent during the week or on that day, your essay is STILL DUE.

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467 Words | 2 Pages

The business world wasn’t the only thing corrupt but the railroads were too. With the railroad industry growing the companies knew they could charge huge rate and gain a large profit. Congressmen were paid off to be quite about the scandal and kept it to themselves. The railroads raised the stocks and were given to well-liked companies.

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1616 Words | 7 Pages

If this happened in every market, those involved would probably not consider

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146 Words | 1 Pages

This suggests that there is some advantage to begin an insider, which is certainly true. At the same time outsider candidates have advantages as well. By looking at the cases of Obama versus Clinton, which resulted in Obama winning

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748 Words | 3 Pages

As a result board members and executives make tons of money at a fast rate. A con is that shareholders will put pressure on the companies to meet their goals, resulting in a “winning at all costs” attitude. Which could mean contaminating ground waters, causing massive unregulated amounts of pollution, and loses of many workers. Another con is workers will not care for their company, they will be overworked and lower level management will have little say in anything, because only shareholders make decisions and higher executives give all orders. Yes I believe it is wrong, even though it's true to this day, employees should have been paid living wages, and should have been treated right for generating so much for the people at the top of the company.

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2411 Words | 10 Pages

E.g. the decisions taken at Enron to create off-balance-sheet transactions (disguising that failed corporation’s true, deteriorating results) • When the board overpays a CEO, it’s the shareholders who lose a share of the profits which could have been either shareholder dividends or capital gains are instead going into the CEO coffers. • Though there is a divide that executives incentive plan actually motivated them to cause their companies to perform better , if company results improved for any reason (including pure serendipity), the executives received higher pay: cause and effect didn’t matter. The company’s performance itself drove the incentive compensation—whether under the control of the CEO and his team or not. •

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1179 Words | 5 Pages

The SEC was proactive in the sense that it allows for tips to be sent in, but they did not take fully investigate the tips sent in. One could argue that there was no point in the whistleblowing system if one is not going to investigate the tips sent in. Another thing to note is the psychological effects of being a whistleblower on Harry Markopolos. In order for a whistleblowing system to be effective, the system should contain anonymity, the possibility of reporting to an independent party, provide any means to make the report, and a follow-up. The SEC failed in the follow-up.

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1848 Words | 8 Pages

And if this is the case, its conduct is closely knitted to the success and failure of it. And as the case of other publicly traded tech giants, like Google. And this is a very interesting fact, anything that these tech giant do can be concealed within its company. However, once there is a whistleblower, there will be a ripple effect seen within the company. A scandal will be in the news and the stocks will fall for that specific company.

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992 Words | 4 Pages

This decision is driven, in part, by the employee’s cognitive evaluation of the costs and benefits associated with each decision alternative (Keil, Tiwana, Sainsbury, and Sneha 2010).Those who take either of the last two routes are considered whistleblowers. Whistleblowers can report wrongdoings through either internal or external channels. Typically, whistleblowers will internally report a wrongdoing before exercising their external channel, but when they choose to use external channels of reporting, they are commonly portrayed negatively as a threat to the organization (Mesmer-Magnus and Viswesvaran 2005, 277-297). According to Fincher (2009) that there are three types of employees who become whistleblowers: senior executives (e.g., vice presidents, company attorney), professionals (e.g., quality control technicians, training instructors, engineers and human resource managers), and hourly workers (e.g., electricians and maintenance

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