Insiders Trading Obligations: the Company's Shares between Theory and Application

By

ACKNOWLEDGEMENT

I would like to thank my supervisor for supporting me throughout my project and giving his valuable suggestions. Finally thanks to all my friends and family for their utmost support and inspiration.

DECLARATION

I, (Your name), would like to declare that all contents included in this dissertation stand for my individual work without any aid, & this dissertation has not been submitted for any examination at academic as well as professional level previously. It also represents my own views & not essentially the ones associated with university.

Contents

ACKNOWLEDGEMENTii

DECLARATIONiii

Introduction2

Insider Trading2

Current Scenario2

Research Methodology3

Aims and Objectives3

Scope and Limitations3

Research Methodology4

Sources of Data4

Mode of Citation4

Research Questions4

Chapterisation5

Chapter I6

Contradictory Legal Perspective6

Major Parties Involved in Insider Trading7

Famous Precedents in Insider Trading8

Situation in United Kingdom10

Major Theories on Insider Trading11

Classical Theory11

Chapter II13

Major Insider Trading Cases in United Kingdom13

Common Practices14

Chapter III16

Self Regulations in United Kingdom16

Conclusion17

References18

List of Famous Insider Trading Cases

SEC v. Texas Gulf Sulphur Co. (1966)

Strong v. Repide (1909)

Dirks v. SEC (1984)

United States v. Carpenter (1986)

United States v. O'Hagan [521 U.S. 642, 655] (1997)

Diamond v. Oreamuno (1969)

Introduction

Insider Trading

The term Insider trading is commonly referred to as “involving the trade of a company's shares or other securities i.e. stock options, bonds by individuals who have access to the confidential information about the company”. The people who enjoy access to confidential information about the company's operations, financial standings and business ventures include the key employees, managers, shareholders and directors.

Insider trading could be done legally if it does not make use of the confidential information or the company's policies are not violated. Broadly, insider trading is more frequently used for practices in which an employee or related person makes use of non-public/confidential information while performing its duties at the organization. Insider trading in modern organizations is considered to be a serious offence. It is regarded as a breach of agreement between the concerned person and the company.

Current Scenario

If we analyze the present corporate practices and trends, it can be ascertained that insider trading is quite a common phenomenon. It is quite prevalent in publically owned organizations that offer stock options to its employees and shareholders. In the United States, insider trading was somewhat legalized by the Securities and Exchange Commission Filings (SECF). However, a major condition following the legal patronage involved trading after the inside information was made public. The publicized information was is often in the form of press releases or publication of the company's financial fiscal performance.

Research Methodology

Aims and Objectives

In our dissertation, we would attempt to study the current status and interpretations on the phenomenon of insider trading. The topic would be approached by thoroughly defining insider trading and viewing it in modern context. The essential elements of the phenomenon and the major court precedents would also be discussed. The dissertation would also highlight the current practices in corporations, the proposed theories on insider trading and its applications in organizations.

Scope and Limitations

The scope of our study is quite extensive due to the differences in its application around the ...