Law Commons^™

Insider Trading As A Precursor To Modern Business Ethics, Robyn Coleman

Finance Undergraduate Honors Theses

There has been a recent change in business that there is more focus on the “stakeholder approach” than shareholder primacy. This can be attributed to the early actions and illegality of insider trading that expected a step beyond a solely economic approach. This attitude was then replicated to become what we see as the modern business approach. Business now includes ethical investing, environmental focus, corporate citizenship, and emphasis on multiple stakeholders that was not always there. Companies have embraced this position while others have been criticized for not doing so. As this approach develops and changes, it will be enlightening …

Collared—A Film Case Study About Insider Trading And Ethics, Garrick Apollon

St. Mary's Journal on Legal Malpractice & Ethics

This Article discusses the visual legal advocacy documentary film, Collared, by Garrick Apollon (author of this Article). Collared premiered in fall 2018 to a sold-out audience at the Hot Docs Cinema in Toronto for the Hot Docs for Continuing Professional Education edutainment initiative. Collared features the story and reveals the testimony of a convicted ex-insider trader who is still struggling with the tragic consequences of “the most prolonged insider trading scheme ever discovered by American and Canadian securities investigators.” The intimate insights shared by former lawyer and reformed white-collar criminal, Joseph Grmovsek, serves as a painful reminder of the …

Application Of The Federal Mail And Wire Fraud Statutes To Criminal Liability For Stock Market Insider Trading And Tipping, William K.S. Wang

University of Miami Law Review

SEC Rule 10b-5 covers a great deal of stock market insider trading and tipping, but certainly not all. For insider trading defendants, some elements of criminal liability may be different and possibly easier to satisfy under mail/wire fraud than under SEC Rule 10b-5 (e.g., materiality, and the requirements for tipper and tippee liability recently tightened for Rule 10b-5 by the Second Circuit). Generally, courts have not addressed these possible differences.

With insider trading and tipping, the victim of mail/wire fraud could be either the information-owner or the party on the other side of the transaction. The courts have not examined …

Securities Regulations Investigations - United States-Swiss Treaty Attempts To Increase Cooperation In Releasing Names Of Swiss-Based Account Holders Involved In United States Securities And Exchange Commission Investigations, Daniel B. Simon Iii

Georgia Journal of International & Comparative Law

No abstract provided.

The New Stock Market: Sense And Nonsense, Merritt B. Fox, Lawrence R. Glosten, Gabriel Rauterberg

Faculty Scholarship

How stocks are traded in the United States has been totally transformed. Gone are the dealers on NASDAQ and the specialists at the NYSE. Instead, a company’s stock can now be traded on up to sixty competing venues where a computer matches incoming orders. High-frequency traders (HFTs) post the majority of quotes and are the preponderant source of liquidity in the new market.

Many practices associated with the new stock market are highly controversial, as illustrated by the public furor following the publication of Michael Lewis’s book Flash Boys. Critics say that HFTs use their speed in discovering changes in …

China - A National Regulatory Framework For The Prc's Stock Markets Begins To Emerge, Benjamin R. Tarbutton

Georgia Journal of International & Comparative Law

No abstract provided.

Insider Trading And Evolutionary Psychology: Strong Reciprocity, Cheater Detection, And The Expanding Boundaries Of The Law, Steven R. Mcnamara

Steven R. McNamara

Insider trading law has expanded in recent years to cover instances of trading on non-public information that fall outside of the fiduciary duty framework set forth in the landmark cases of Chiarella and Dirks. The trend towards a broader insider trading law moves the law closer towards what evolutionary psychology tells us humans desire when engaging in collective action: that individuals benefit in proportion to the effort or investment they make in a common enterprise. Insider trading law can therefore be understood as a societal response to cheating in group activities, and the recent expansion of the law as …

Self-Regulation Of Insider-Trading In Mutual Funds And Advisers, Tamar Frankel

Faculty Scholarship

Mutual funds are required to impose Codes of Ethics on many of their employees. Did this requirement make a difference? After all, similar Codes proliferate in many other financial and business corporations! ⁴ with fairly miserable results. In fact, the temptations facing employees and managers of many business corporations that published self-imposed Codes are relatively weaker than the temptations facing employees and managers of mutual funds. Yet as compared to mutual funds, these business companies have failed to prevent insider-trading!

I believe that regulated mutual funds are less prone to insider-trading than non-regulated funds and traders because their Codes of …

The "In Connection With" Requirement Of Rule 10b-5, C. Edward Fletcher Iii

Pepperdine Law Review

No abstract provided.

Mapping The Future Of Insider Trading Law: Of Boundaries, Gaps, And Strategies, John C. Coffee Jr.

Faculty Scholarship

The current law on insider trading is remarkably unrationalized because it contains gaps and loopholes the size of the Washington Square Arch. For example, if a thief breaks into your office, opens your files, learns material nonpublic information, and trades on that information, he has not breached a fiduciary duty and is presumably exempt from insider trading liability. But drawing a line that can convict only the fiduciary and not the thief seems morally incoherent. Nor is it doctrinally necessary.

The basic methodology handed down by the Supreme Court in SEC v. Dirks and United States v. O'Hagan dictates (i) …

Are Short Sellers Really The Enemy Of Efficient Securities Markets Or Are They Just Public Patsies?, Abel C. Ramirez Jr.

Abel C Ramirez Jr.

When the 2008 global financial crisis caused the stock market to drastically decline, short selling generated intense political and economic scrutiny that negatively characterized the practice as a predatory scheme. When the 2008 global financial crisis caused the stock market to drastically decline, short selling generated intense political and economic scrutiny that negatively characterized the practice as a predatory scheme. As a legitimate investment strategy, short selling is a method by which investors can capitalize on over-valued stocks that decline – this is NOT the same as “contributing” to the stock’s decline, which short selling’s detractors might believe.

Reflections On The Securities Law Of Jordan , Bashar H. Malkawi, Haitham A. Haloush

American University International Law Review

No abstract provided.

Reflections On The Securities Law Of Jordan , Bashar H. Malkawi, Haitham A. Haloush

American University International Law Review

No abstract provided.

Risks And Hedges Of Providing Liquidity In Complex Securities: The Impact Of Insider Trading On Options Market Makers, Stanislav Dolgopolov

Fordham Journal of Corporate & Financial Law

No abstract provided.

Securities Fraud, Officer And Director Bars, And The "Unfitness" Inquiry After Sarbanes-Oxley, Jon Carlson

Fordham Journal of Corporate & Financial Law

No abstract provided.

A Middle Ground On Insider Trading, Thomas A. Lambert

Faculty Publications

For more than four decades, corporate law scholars have debated whether government should prohibit insider trading, commonly defined as stock trading on the basis of material, nonpublic information. Participants in this long-running debate have generally assumed that trading that decreases a stock's price should be treated the same as trading that causes the price to rise: either both forms of trading should be regulated or neither should. I argue for a middle-ground position in which "price-decreasing insider trading" (sales, short sales, and purchases of put options on the basis of negative information) is deregulated, while "price-increasing insider trading" (purchases of …

The Essential Role Of Securities Regulation, Zohar Goshen, Gideon Parchomovsky

All Faculty Scholarship

This Article posits that the essential role of securities regulation is to create a competitive market for sophisticated professional investors and analysts (information traders). The Article advances two related theses-one descriptive and the other normative. Descriptively, the Article demonstrates that securities regulation is specifically designed to facilitate and protect the work of information traders. Securities regulation may be divided into three broad categories: (i) disclosure duties; (ii) restrictions on fraud and manipulation; and (iii) restrictions on insider trading-each of which contributes to the creation of a vibrant market for information traders. Disclosure duties reduce information traders' costs of searching and …

Regulation Fd-Fairly Disruptive? An Increase In Capital Market Inefficiency, Peter Talosig Iii

Fordham Journal of Corporate & Financial Law

No abstract provided.

The Sec's Regulation Fd, Richard L. Anderson, David Becker, Harvey L. Goldschmid, Eric D. Roiter, Susan E. Wolf, Alex Zisson, Jill E. Fisch

Fordham Journal of Corporate & Financial Law

No abstract provided.

The Hot Ipo Phenomenon And The Great Internet Bust, Andres Rueda

Fordham Journal of Corporate & Financial Law

No abstract provided.

The Insider Story, Richard C. Reuben

Faculty Publications

The central issue in United States v. O'Hagan, No. 96-842, is the validity of the so-called "misappropriation theory" of insider trader liability under Section 10(b) of the Securities and Exchange Act of 1934. 15 US.C. 78(j)(b). The justices heard oral arguments in April. If the theory propounded by federal regulators is endorsed by the Court, it would expand insider trader liability under U.S. law.

Liquidity Versus Control: The Institutional Investor As Corporate Monitor, John C. Coffee Jr.

Faculty Scholarship

Within academia, paradigm shifts occur regularly, some more important than others. As the takeover wave of the 1980s ebbs, a significant shift now appears to be in progress in the way the public corporation is understood. Above all, the new thinking emphasizes that political forces shaped the modern corporation. While the old paradigm saw the structure of the corporation as the product of a Darwinian competition in which the most efficient design emerged victorious, this new perspective sees political forces as constraining that evolutionary process and possibly foreclosing the adoption of a superior organizational form. Thus, my colleague Professor Mark …

"Front-Running" - Insider Trading Under The Commodity Exchange Act, Jerry W. Markham

Faculty Publications

On ‘Black Monday,’ October 19, 1987, ‘perhaps the worst day in the history of U.S. equity markets,’ the Dow Jones Industrial Average fell by 508 points, representing a loss of approximately $1 trillion in the value of all outstanding United States stocks. In the wake of the crash, numerous studies were conducted and reports published in which a host of regulatory issues were considered, including a disturbing phenomenon called ‘front-running.’ Simply stated, the practice of front-running involves a transaction in a commodity futures contract or a stock option contract by a trader with ‘material’ nonpublic information concerning a ‘block’ transaction …