Law Commons^™

The Stock Act - Dispelling A Legal Perception, Casey K. Lekahal

Casey K Lekahal

“Few practices, short of manipulation, have as deleterious an effect on the investing public’s confidence in corporate institutions and the securities markets as the selective disclosure of and misuse of so-called inside information, i.e., material nonpublic information.”

Insider trading harms investor confidence in the markets which makes it more difficult for firms to raise capital and decreases liquidly. Further, insider trading harms the issuing corporation as it creates an incentive for management to direct the company to maximize their personal monetary gain rather than the corporation’s. Finally, insider trading hurts a non-issuer employer, such as a law firm or financial …