Insider Trading: Perspectives and Cases

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Although the phenomenon of insider trading has existed in the global stock markets since the decade of the fifties, it was only in the seventies that regulators actually became vigilant about this form of speculation, popularly known as the victimless crime. The slow take-off in regulation was because of a host of reasons. One was the dilemma surrounding insider trading. Opinion on this issue is sharply polarized. On one hand, there are many who extol its virtues, and say insider trading leads to the actual price discovery of a scrip and results in speedy information dissemination. On the other hand, there are others who denigrate insider trading saying that it leads to asymmetric market information, causing a market bias against the small, uninformed investor with the result that fear of losses eventually leads him to exit the market. The other reason is that evidence in such cases is usually circumstantial. However, strong such evidence may be, it is not very tenable in any court of law. The book is an exposition of these contrarian approaches to a very pressing problem. The highlight is a speech by the SEC Director of Enforcement (Insider Trading) Ms. Linda Chatman. They discuss the progress of regulation, analyze why the problem is elusive and talk about strategic plans for future regulation. Apart from a number of articles which bring out important aspects such as whether small investors should track insider traders to make windfall gains, and in-depth details about the legal and regulatory global scenario, the book contains a number of cases and controversies which hit the headlines (even though some of them resulted in exoneration). Among these are Hindustan Lever-Brooke Bond, Martha Stewart, Reebok, miscellaneous cases involving investment bankers, fund managers and compliance officers who were custodians of confidential information on the basis of which they actually indulged in insider trading.

ABOUT THE AUTHOR Jayshree Bose

Jayshree Bose is a first class postgraduate and National Merit Scholarship holder from Calcutta University. She has had a prolonged career in the Mumbai media circles with national financial dailies such as Business Standard and Financial Express and magazines such as Businessworld. She served there for over 16 years in senior capacities such as Associate Editor and Assistant Editor, and has been a prolific writer on topics related to banking, insurance and the economy, which are her prime areas of interest. During her tenure at Mumbai, some of her articles led to a series of financial sector reforms. She was earlier a consultant with the Institute for Financial Management and Research (IFMR), an ICICI Bank-sponsored Business School and Research Institute at Chennai. She has also written and edited books on banking and finance for KPMG and Jardine Fleming and brought out special issues of the Indian Banks' Association (IBA) Journal on a turnkey basis. Jayshree Bose is now a Faculty Member-Consulting Editor with Icfai Books, a division of the Icfai University Press, where her work involves writing articles and editing books on her special areas of interest such as banking, insurance, the economy and business strategy. She is also a regular contributor to professional magazines on insurance and banking.