discourages equity investment by uninformed outsiders because they fear trading with informed insiders, which reduces the liquidity of capital markets.
Nevertheless, in the forty years between 1944 and 1984, the SEC brought just 129 civil insider trading
actions, a mere fraction of which were accompanied by criminal prosecutions.
Effective Strategies to Mitigate Risk of Insider Trading
According to experts, insider trading
is difficult to prove, but Sebi is making as much effort as it can to crack down on this practice.
falls in the broad area of white collar crime and white collar crime is a distinct category of crimes due to the social and financial status of the offenders.
The SEC's enforcement action against Rajaratnam and Galleon was part of a larger insider trading
probe that has resulted in civil charges against a total of 29 individuals and entities including hedge fund advisers, Wall Street professionals, and corporate insiders.
The SEC data are also the original source for several commercial vendors, such as CDA/Investnet, that provide data and analysis on insider trading
Proponents of insider trading
regulation emphasize its rent-extraction potential, suggesting that insider trading
might simply be an inefficient private benefit of control that accrues to managers and other insiders at shareholders' expense.
An empirical claim forms the core of the argument from harm: that insider trading
will significantly deter investment.
is probably the most known and publicized white-collar crime.
It includes a discussion of what information may be deemed to be material and non-public, analysis of the prohibitions against insider trading
, the scope of the company's obligation to disclose material information, and the formulation of corporate procedures that promote compliance with insider trading
and disclosure requirements.
78 million yen for a 2005 insider trading
scam, the largest ever fine related to insider trading