Course Hero Logo

BUS 5111 GROUP WORK DRAFT.pptx - BUS 5111 FINANCIAL...

Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. This preview shows page 1 - 3 out of 5 pages.

BUS 5111 FINANCIAL MANAGEMENTGroup 0008A .1.Wiharto Hernowo2.Justin Ofor3.Karen Lawrence4.William Higley
IntroductionLegal Issues Related to Insider TradingIt is legal for current employees of the two merging company to buy stock in the new company that isbeing formed. However, these transactions, must be properly filed and processed through the Securitiesand Exchange Commission (Hall, 2018, para. 2,3). There are strict laws in place that govern the process.It is important that all investors understand and abide by these laws. The rationale is outlined below:Defined: Insider Trading is defined by the federal government as, “buying or selling a security, in breachof a fiduciary duty or other relationship of trust and confidence, on the basis of material, nonpublicinformation about the security” ("Insider Trading," n.d. para. 1). Or more simply, “the illegal use of non-public material information for profit” (Hall, 2018, para. 4).Reason for the Laws: Insider trading undermines investor confidence in the fairness and integrity of thesecurities markets ("Insider Trading," n.d. para. 9). In essence, it gives the insider an unfair advantageover other potential investors and tradersThe Insider Trading and Securities Fraud Enforcement Act of 1988 states that insiders must “disclose orabstain” from trading a firm’s securities. The law imposes penalties up to $1 Million and up to 10 years inprison. It also established a bounty program where informants could collect up to10% of the insider’sprofits. Moreover, it holds top management liable for insider trading of subordinates (Gaughan, 2008, p.

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 5 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Fall
Professor
Dr. Schmidt
Tags
Management, U S Securities and Exchange Commission, securities fraud, Gaughan, Jennifer Lombardo

Newly uploaded documents

Show More

Newly uploaded documents

Show More

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture