Insider Trading Regulations: A Comparison of Judicial and Statutory Sanctions

Abstract

Insider trading is viewed as a threat to the fairness and integrity of the capital markets. The securities market's allocation of resources depends on: (1) the preservation of a fair system in which investors are willing to trade, and (2) the assurance that market participants are properly rewarded for identifying good investment opportunities. The duties and responsibilities of market participants in acquiring and using information can be based on their fiduciary duties, the obligations associated with the possession of price-sensitive information, or the processes by which the information is acquired.

Board independence and private information-based trading: evidence from Malaysia

“…Despite the ongoing debates on the impacts of insider trading, regulators and scholars have generally reached consensus that trading on material private information which has not been officially announced could undermine market efficiency (Carlton and Fischel, 1982; Fishman and Hagerty, 1992; Keenan, 2000), create unfair competition among investors (Cho and Shaub, 1991; Lekkas, 1998; Shaw, 1990) and impair market integrity (Huss and Leete, 1987). Previous literature also suggests that trading on private information may cause agency conflict between shareholders and managements.…”