Introductory Notes on Limits on Insider Trading

Insider trading is the act of trading securities for personal gain utilizing information that

is not generally available. Even while it's not always against the law, it presents moral and legal

questions. In the USA, insider trading is governed by the Securities and Exchange Commission

(SEC), which deems it unlawful if the trader had access to material non-public information and

traded the securities based on that information. To preserve the integrity of the securities market

and encourage fair competition among investors, insider trading should be restricted in this

regard.

Public Information's Vital Role in Promoting Fair Competition in the Securities Market

For placing bets on his team's games, Pete Rose was subject to a baseball suspension and

was disqualified from consideration for the Hall of Fame. Like the Enron case, insider trading by

managers is immoral since they have access to confidential information that is not available to

the public. In each instance, the parties breached the stakeholders' confidence while enjoying an

unfair competitive advantage. Even if managers made wise decisions based on truthfully

acquired information, they should nonetheless be held accountable for their choices. Managers

should be aware of the repercussions of such conduct, and the SEC should impose stringent

regulations and sanctions to discourage insider trading. To ensure fair competition in the

securities market, private information must be made public. Information that could affect the

public's investment decisions should be made public by managers. Investors can thus decide

whether to buy, hold, or sell shares with knowledge.

The Benefits of Prompt and Official Information Dissemination for Promoting Fair

Competition in the Securities Market

Another important factor is the time of information dissemination. Sharing information

on a public website is insufficient. To make sure that the information is widely shared and

accessible to all investors at once, a formal press conference is required. This encourages

openness and guarantees that all investors have access to the same information. Additionally, it

lessens the chance of insider trading and market manipulation. In conclusion, it is wrong and

unlawful to trade insider information. To preserve the integrity of the securities market and

encourage healthy investor competition, it should be constrained. It is important to hold

managers accountable for their decisions and to implement strong rules and sanctions. It is

essential to reveal secret information to the public, and a formal press conference is required.

References

Securities and Exchange Commission. (n.d.). Insider Trading.

https://www.sec.gov/Archives/edgar/data/1164964/000101968715004168/

globalfuture_8k-ex9904.htm

U.S. Securities and Exchange Commission. (2019). Prohibiting Insider Trading. Retrieved from

https://www.sec.gov/answers/insider.htm.

Williams, K. (2017). Ethical Issues Surrounding Insider Trading: Legal vs. Illegal. Journal of

Legal, Ethical and Regulatory Issues, 20(2), 1-8.