Insider-trading-articles-assignment
response post (150 word minimum) for each article
1-Hi all,
Most of these crimes have one common thing; there is an inside informant who relays the information about stocks before they are released to the public market. All the articles revolve around insider trading for instance how the SEC charged Martha Stewart and Peter Bacanovic for their false statements concerning Stewart’s IMCLONES trade to reduce losses. Same case scenario happens in the Mathematician for Martha article, where insider trading may smell wrong for other reasons but for most purposes, it can be viewed as one among the unanticipated factors affecting the price of the stock, which depending on investors can be either way. So insider trading may be portrayed as a crime, but it’s instead an anomalous one. Misrepresentation of financial information may result in the market price of the stock either to reduce or increase that depending on the interested party.
The fraud on the market article portrays how misrepresentation of shares made the stock market price to get altered. Halliburton argues on the efficacy of Capital market and how they often determine the market price of securities, but the court overruled his arguments. Trading of stock markets in advance is also a crime as seen from the Notes From a Little Fish article, but eventually, only the small players get nabbed. At some point, the government might try to interfere with stock markets as in the scenario of Wells Fargo where fake accounts were created, and vast amounts of money got lost.
My reaction is that those who commit these crimes should be prosecuted that’s depending on the tangible evidence at hand for they cause economic sabotage.
2-Wells Fargo which fraudulently opening a two million retail account affected the reputation of the company to the point where the CEO John Stump had to resign. Just like the Wells Fargo case, another top management official called Martha Stewart and is Broker Peter Bacanovic faced with fraud charges by conducting illegal insider trading; this was after selling stock in a biopharmaceutical company called ImClone Systems. Another fraud case involves the article “mathematician for Martha” includes insider trading which may control decision making in the when trading. Insider trading can create an unfair trading ground due to the restrained demand and supply of the stocks. Just like in the other cases, insider trading can make the employees or another party which has information about the company to make the right decision at the expense of the other traders. It also creates a detrimental which lead to weak capital markets.
Trading parties in the market should ensure there are openness and honesty to create a competitive trading environment. All the cases involve improper transactions which affect the performance of the company. Corporates should not be held liable for such actions. The fraudster should solemnly be held accountable for such actions. In all the articles, legal measures ought to be taken to the involved parties. A commission needs to be created to minimize any insider trading. It can be utilized through the use of whistleblowers to identify organizations involved in these malpractices. If such actions had been taken in the named cases, a fair trading environment could be created to support fair competition in the market. Creation of ethical practices can help in minimizing frauds in the stock market.