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Insiders Trading

In: Business and Management

Submitted By sbagby24
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Insiders Trading: Is it unethical?

Table of Content
Introduction 3
Body 3-4
Appendix A 5
Conclusion 5
Work Cited 6

Introduction
Insider trading occurs when a trade has been influenced by the privileged possession of corporate information that has not yet been made public. Because the information is not available to other investors, a person using such knowledge is trying to gain an unfair advantage over the rest of the market. You're acting on information not known to other investors. Using nonpublic information for making a trade disturbs transparency, which is the basis of a capital market. Information in a transparent market is disseminated in a manner by which all market participants receive it at more or less the same time. Under these conditions, one investor can gain an advantage over another only through acquiring skill in analyzing and interpreting available information. This skill is based on individual merit and awareness. If one person trades with nonpublic information, he or she gains an advantage that is impossible for the rest of the public. This is not only unfair but disruptive to a properly functioning market if insiders trading were allowed, then investors would lose confidence in their disadvantaged position and would no longer invest.
Body
The practice of insider trading is considered to be unethical by many people around the world. The United States Securities and Exchange Commission (SEC) describe two kinds of insider trading, legal and illegal. Stockholders may feel insider trading is illegal because it is discriminating to their own interest. There are also stockholders who feel that insider trading is not unethical at all and that it is just another acceptable business practice. When information is made public and is passed, it is no longer illegal because everyone will have

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