Read the following questions and answers and give your response:

1. Define insider trading and give a specific example that has been in the news.

Insider trading is commonly known as the trading stock of publicly held corporations on the basis of material, nonpublic information. There are two key factors that makes a person involved in insider trading (1) the trader has violated his or her legal duty to the shareholders and the corporation and/or (2) the trader knows the source of information is violating a legal duty.

Example: December 10, 2014, the US Court of Appeals for the Second Court of Manhattan overturned and threw out the prior convictions of inside trading for hedge fund traders, Todd Newman and Anthony Chiasson. Newman and Chiasson were convicted in 2012 on the basis that they knew that insiders in the technology companies (Dell and Nvidia) were improperly leaking information that was confidential to the hedge fund and acted upon it for their personal gain. Their convictions were overturned based on ruling that Mr. Newman and Mr. Chiasson were so far from the initial tips at Dell and Nvidia,that they could not have not known of personal gain/ benefit

1. Now discuss how insider trading negates equity and effectiveness and fairness in markets. Use pages 253 to the top of page 256 as a guide for this section of the assignment

Insider trading negates fairness in the market because with the information obtained and used by the inside trader it discloses information beforehand to a select group of individuals, hindering the opportunity of fair trade negotiations.

Insider trading also negates equity and effectiveness because efficiency is in itself working in an ethical manner whereas insider trading violates the very essence of being ethical for personal gain. Efficiency provides people to a sense confidence in the fairness or equity of corporation. Insider trading is a form of cheating in the

Answer rating: 100% (QA)

I disagree with the answer because in this the writer states t... View the full answer