Illegal Insider Trading

2049 Words 8 Pages
Introduction to Insider Training:
Insider trading, usually referred with the negative connotative meaning, is the trading of non-public information among shareholders to gain a personal profit or prevent any possible losses. The violation of this practice can be denoted by stating that “Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security” (“Insider Trading”, 2014), in which infractions include “revealing non-public company info to major shareholders who, in effect, withdraw large amounts of stock. Although there are a few benefits of insider trading such as creating stability,
…show more content…
I started off purchasing 3 companies’ stocks disturbing my buy evenly on McDonald’s, Verizon, and Texas Instruments which were chosen from a list of “trading cards” of some companies in the news that day. On day one, I’ve already noticed that Verizon stocks were decreasing in market value and I was incurred a loss of 10%. So I made the decision to gradually sell off the remaining shares and 40 shares of McDonalds over the next few days. After which, I invested in LinkedIn and Palo Alto Networks by holding 20 and 21 shares respectively . I’ve detected that this significantly increased my overall gains and Return percentage to 1.05% by November 10 which was halfway the stock trading game simulation period. By now, I’ve gained some knowledge towards choosing the right companies that allowed me to maximize my total equity and acquire positive overall return percentage gain by analyzing the each company’s growth in value per day time series graph and exec price on that particular day. However, since this is a game simulation, I found myself being ranked among six other players who joined my game being ranked by the overall return value and any gains/losses in market stock. So, initially, I thought …show more content…
The purpose of this act was to clarify the ambiguity of the legality of trading on the knowledge gained during the course of official duties for members of Congress ("A Primer on... The STOCK Act"). This law prohibits members and employees of Congress, and employees in the Executive and Judicial branches of the federal government from using "any nonpublic information derived from the individual 's position… or gained from performance of the individual 's duties, for personal benefit” ("What is the Stop Trading on Congressional Knowledge (STOCK) Act? - Insider Trading by Congress - ProCon.org", 2012). The Act makes it lucid that government officials and employees have a duty to be honest to United States consumers and not to siphon off nonpublic information to make a profit. Therefore, it is mandatory that members of Congress and government employees report certain investment transactions within 45 days after a trade and that the information in public financial disclosure reports be made available on agency websites and searchable databases ("FACT SHEET: The STOCK Act: Bans Members of Congress from Insider Trading", 2012). The Martha Stewart case is a hallmark case for demonstrating the illegal aspects of insider trading. Delving deeper into this incident shows that the CEO of a biopharmaceutical company named ImClone System had instructed his broker to inform

Related Documents

Related Topics