Insider trading definition economics
More interesting to some however was the news that its price had begun to rise steeply on international stock markets, several hours before the official public announcement in London, suggesting strongly that the news had been leaked and that there had been significant insider trading. The Australian Stock Exchange was reported as looking into this aspect, as a matter of course. What is Insider Trading? Insider trading is a concept which is insider trading definition economics to describe and define generally but which can be difficult to do specifically or precisely.
Although a large number of countries, probably the majority, have laws against insider trading, a significant number do not. Thus, for example, in the UK, negative insider trading, ie where a person acquires information that would be considered insider information, but which information such person then uses not to make a trade which he or she otherwise would have done, is not considered illegal. This is presumably because of the added difficulty of proving a negative.
Other countries make no such distinction. The USA and the Anglo-Saxon countries generally, including Australia, are amongst the leaders in opposition to insider trading definition economics trading.
In Australia, the provisions relating to it are found in the Corporations Act, which devotes a considerable number of pages to it and provides a definition of sorts. Many institutions and major companies have their own formal Insider Trading Policy. The Monash University Insider Trading Policy, for example, summarises the definition insider trading definition economics insider trading as follows.
One does not have to be a lawyer to see the potential judicial problems inherent in such definition. The ASX maintains a special unit to monitor the market. If insider trading definition economics person is charged with an offence of insider trading, the problem widens from one of definition to include insider trading definition economics of proof.
It is said insider trading definition economics insider trading is easy to detect but difficult to prove. Between and32 persons were charged with insider trading but only 9 were convicted.
Some cases of Not e. Perhaps indicative of the inherent difficulties in conducting a prosecution for insider trading, two of the more recent notable cases, often thought, by the public, to be insider trading cases, were in the event, not insider trading cases at all; these were the Steve Vizard case in Australia and the Martha Stewart case in the USA. Steve Vizard was a successful TV entertainer and businessman. It was alleged that in as a director of Telstra he had misused information he had acquired from his position as such to deal in shares in 3 public companies thereby making a relatively small profit.
However, to much criticism, the Commonwealth Director of Public Prosecutions declined to prosecute him criminally for insider trading. In the Martha Stewart case in the USA, Stewart also, like Vizard, a successful TV personality and entrepreneur sold some shares she owned shortly before the company announced some devastating news which caused a steep drop in its share price.
Since Stewart was friendly with the president of the company it was assumed he had leaked the news to her beforehand. However in the course of the proceedings Stewart made statements and did things for which she was subsequently charged with making false statements and obstructing the course of justice.
At the trial, the judge dismissed the principal charge; namely that she had publicly declared her innocence and hence had committed fraud. However the jury convicted her of the other charges and she was sentenced to gaol. Some Reasons why it should be Illegal. There exists an implicit duty not to breach such trust. Any benefit derived by the insider trader belongs to the company, which has been fraudulently deprived of it by the insider.
Whilst asymmetric knowledge trading will always occur, the law should do what it can to prevent it. Some Reasons why it should not be Illegal. It gives those most likely to have information, namely insiders, an opportunity to use and benefit therefrom. The likelihood of major corporate disasters, such as HIH is much reduced since insiders will want to use the information of its likely insider trading definition economics, sooner rather than later, and hence will expose such potential major insider trading definition economics before they occur.
There is no way the law can preclude trading between parties with asymmetric knowledge and to purport to do so merely inhibits the working of the market to the ultimate detriment of all. Some cases of Not e Perhaps indicative of the inherent difficulties in conducting a prosecution for insider trading, two of the more recent notable cases, often thought, by the insider trading definition economics, to be insider trading cases, were in the event, not insider trading cases at all; these were the Steve Vizard case in Australia and the Martha Stewart case in the USA.