Illegal Insider Trading

Illegal Insider Trading

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Illegal Insider Trading

Consider this: “Imagine a boardroom of corporate executives, along with their lawyers, accountants, and investment bankers, plotting to take over a public company. The date is set; an announcement is due within weeks. Meeting adjourned, many of them phone their brokers and load up on the stock of the target company. When the takeover is announced, the share price zooms up and the lucky investors dump their holdings for millions in profits.” First things first – insider trading is perfectly legal. Officers and directors who owe a fiduciary duty to stockholders have just as much right to trade a security as the next investor. But the crucial distinction between legal and illegal insider trading lies in intent. What this paper plans to investigate is the illegal aspects of insider trading. What is insider trading According to Section 10(b) of the Securities Exchange Act of 1934, it is “any manipulative or deceptive device in connection with the purchase or sale of any security.” This ruling served as a deterrent for the early part of this century before the stock market became such a vital part of our lives. But as the 1960s arrived and illegal insider activity began

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