Forgot your password?

Lawmakers and Insider Trading

By Edited Mar 27, 2016 0 0

Lawmakers and insider trading regulations need to meet on a common ground that will protect more investors. The US Securities and Exchange Commission (SEC) has made valiant attempts to prohibit any errors with the stock trades. The broker-dealers are responsible for the stock trades that originate from their access portal to the trading centers. The requirements for trades with the SEC Rules are making the transactions more transparent and reliable. Some people may be prohibited from initiating a transaction. Buyers and sellers need to have clearance before they can participate in a stock trade.

Highly visible transactions may influence some people to follow the lead of corporate investors. Many shares of IBM stock may suddenly be sold when a corporate executive needs to liquidate his assets for cancer surgery costs. The sale is open and approved because of a previous agreement to sell an established number of shares within a specific time frame. The public may view this as a negative reflection on IBM. The actual issue may have been that another person was suffering with the high costs of cancer care.

The Financial Industry Regulatory Authority (FINRA) Rule 3220 and US SEC Rule 10 have some influence on insider trading. The problem with most of the violations is that the information is verbal. There is not anyway to prosecute anyone unless there is a witness to the release of the non-public information. Martha Stewart acted on non-public information which she had received verbally from an associate. She would have never been prosecuted if the exchange had not been reported. That kind of violation can happen many times with very little option for the enforcement of regulations. The rules are in place to protect the investors, businesses, and market systems.

Martha Stewart did not attempt to make any reparations. She simply stated that she did not want to go to jail. Her image had been somewhat connected with a concern for quality and integrity. The general public may have been surprised because most people consider common decency an attribute of integrity. People do not want to lose money on the stock market. But all buyers should take the same chances when they buy stock. Stewart gained an added edge. She never went public with the information or questioned the integrity of her actions. Stewart is one of the people which have been prosecuted by the lawmakers and insider trading regulations.



Add a new comment - No HTML
You must be logged in and verified to post a comment. Please log in or sign up to comment.

Explore InfoBarrel

Auto Business & Money Entertainment Environment Health History Home & Garden InfoBarrel University Lifestyle Sports Technology Travel & Places
© Copyright 2008 - 2016 by Hinzie Media Inc. Terms of Service Privacy Policy XML Sitemap

Follow IB Business & Money