01:220:301 Lecture Notes - Lecture 2: Regulation Fair Disclosure, Insider Trading, Fiduciary
29 Feb 2016
School
Department
Course
Professor
Document Summary
By reem heakal | updated july 26, 2013 | When hearing news stories about illegal insider trading activity, investors usually take notice because it"s an activity that affects them. Although there are legal forms of insider trading , the better you understand why illegal insider trading is a crime, the better you"ll understand how the market works. Here we discuss what an illegal insider is, how it compromises the essential conditions of a capital market and what defines an insider. Insider trading occurs when a trade has been influenced by the privileged possession of corporate information that has not yet been made public. Because the information is not available to other investors, a person using such knowledge is trying to gain an unfair advantage over the rest of the market. Using nonpublic information for making a trade violates transparency, which is the basis of a capital market.
