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Should Pete Rose Benefit From Betting On The Success Of A Team He Managed?

743 Words3 Pages

INSIDER TRADING According to US Securities and Exchange Commission (SEC, 2013), illegal insider trading occurs when one buys and sells securities while breaching the fiduciary duty or relationship of trust and confidence. However, insider trading may be legal when corporate insiders buy and sell stocks in their companies without possession of material and nonpublic information. 1. What limits should there be on insider trading? The limit on insider trading can be approached from both ends. The legal insider traders should be limited in their actions. This is because the insider trades can predict anticipated future returns and even earnings (Tang, 2017). This has negative effects on the investors. The employees of a company will always …show more content…

2. In the USA, Pete Rose was a popular baseball player, and then manager, who was punished for betting on his own team to win. a) Should Pete Rose be allowed to profit from betting on the success of a team he managed? No. Pete Rose should not be allowed to benefit from betting on the team he managed. This is because he has material information that the public does not have. For instance, he understood the limitations and strengths of the team. He could also, as a professional coach, analyses the performance of the competitor team/s. b) Should Pete Rose be punished more harshly if he profited from betting on the failure of a team he managed? No. Pete Rose should not be punished more harshly for benefitting from the betting. He should just be punished within an acceptable range. The reason for the punishment is that he is an insider trader who has material information that is not disclosed to the public. He may have known the weaknesses of the team he managed. Other people did not understand them because they are not technically savvy in this …show more content…

In the Enron case, several managers sold all their Enron stock about an hour before it became public knowledge that the company was not worth as much as everyone thought. Should a manager be punished for acting prudently based on knowledge they have discovered honestly only because the general public does not have that knowledge? The managers should be punished for illegal insider trading. The selling of the Enron stock is illegal because the managers had substantive information about the poor performance of the company. This material information was not in the public domain and other stakeholders were not aware of it. In the end, those who bought the stocks at higher prices would lose on them. The investors were not protected by the managers who served their selfish interests. 4. Should managers be required to disclose private information they have that might influence the investment decisions of the public? Also, address the question of timing about the dissemination of information: is it enough to share information on a public website or should a formal press conference be

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