Insider Trading

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M.Sc. Finance, 1st Semester Professor Braun Business Ethics 16 October 2012

Insider Trading
In a securities market there are winners and losers, people who get good prices and people who get bad prices. Other things equal, the person with the best information about what is being bought or sold stands in the best position to find bargains and get the best price. Competing against corporate insiders, who possess superior information thus increases the risk that one loses. As a society, we have good moral reason to protect ourselves against this kind of fraud. Definition of “Insider Trading”

Insider trading is the trading of a corporation's stock or other securities (e.g. bonds or stock options) by individuals with access to non-public information about the company. In most countries, trading by corporate insiders such as officers, key employees, directors, and large shareholders may be legal, if this trading is done in a way that does not take advantage of non-public information. However, the term is frequently used to refer to a practice in which an insider or a related party trades based on material non-public information obtained during the performance of the insider's duties at the corporation, or otherwise in breach of a fiduciary or other relationship of trust and confidence or where the non-public information was misappropriated from the company.[1] Unfairness

The first and most obvious argument that one may find to describe insider trading as immoral is the one of unfairness. Under their definition insider trading represents an unethical practice as it is not fair to all participants and...
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