Insider Trading Victimless Crime

1415 Words3 Pages

According to Stephen Sibold (2003), he stated that illegal insider trading is not a victimless crime because investors who unknowingly traded with those people who has the inside information loss due to unequal and unfair connection. He also mentioned that illegal insider trading would lead to a loss of liquidity if international capital flows avoid them (Sibold, 2003). Whereas David Gleason (2013) said that insider, trading is a crime without the victim because it does not cause the classes of assessable losses to identify victims that conventional fraud causes. Therefore, insider trading may not impose a direct financial smash; it does directly affect investor’s trust, which is an essential element of an efficient capital market structure. …show more content…

He also mentioned that if it is continues to happen the markets reputation will go down and investors will loss there hope in market. The view of insider trading as a victimless crime ignores the fact that in an insider trading transaction there is a party who loses value from the securities involved or is forced to take a loss. Perhaps it might be more accurate to say that insider trading is a crime with an unknowing victim.In general, however, the way of "insider trading" would not be a criminal offense, because it is impossible to define the concept in a way that would not block rightful provisional research and trading. In practice, these laws give the government a very dull association with which to knock down any profitable firm it wishes whereas Elaine Sternberg (2000) he wrote that unethical insider trading is not a victimless crime. He also stated that insider trading makes it very clear who the victims of unethical insider trading are shareholders because their corporate information has been misappropriated. Therefore, the main victim of unethical insider trading is the shareholder of the company …show more content…

He also mentioned that through his research he found out that insider trading law is associated with a lower ownership concentration at the firm level. Insider trading also affects the corporate governance. Furthermore, the insider trading law is optimistic related to market liquidity might help address rival claims about the effect of insider trading on overall market efficiency and in particular on market liquidity. Therefore, insider trading is inefficient and harmful to equity markets and must to be subject to government regulation. Some commentators argue that insider trading is indeed harmful and therefore that (some forms of it) ought to be prohibited through regulation. Others, however, argue that insider trading is not efficient but rather, on the opposite, is efficient and therefore prohibiting it does not make logic whereas Carlton and Fischel argues about the government regulators towards insider trading on the ground that firms will voluntarily write the optimal level of prohibition into their corporate charters. On the other hand, implicit assumption underlying their argument is that managerial labor markets and capital markets are well functioning and efficient. In distinguish; market theories of insider trading reflect on the larger implications of insider trading to equity markets as a whole. These theories evaluate the effect of insider trading on entire market performance in outcome of measures like liquidity and informational

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