Ethics On Insider Trading Essay

1015 words - 5 pages

Insider trading laws vary significantly from countries to countries. The conduct for the most part associates with illegal conduct. There seems to be general agreement in most countries that the practice is morally wrong.
My opinion on insider trading from ethics of duty approach, also commonly known as deontological ethics, is that the practice is immoral. “Deontic” is defined as “of such ethical concepts as obligation and permissibility” and “designating the branch of logic that deals with the formalisation of these concepts”. This approach is based on the theory proposed by Immanuel Kant, and is referred to as a “non-consequentialist” approach which suggests that the locus of right and wrong of the action is not subject to the outcome of the decision, but instead the principle motivating the decision. London’s actions are in many ways an evident lack of ethics of duty. Ethics of duty suggests that decisions should be made by adhering to a set of rules or by fulfilling the individual’s duties. For Kant, to act out of duty is to act from reverence for the moral law. In this case, London neglected fiduciary duties to the client, public investors and business community at large. Where such duties subsist, it should act as both a moral and legal constrain or barrier to an individual acting in opposition to the interest of the firm. London has also breached the fundamental principles of a professional accountant that is clearly stated in the Professional Code of Ethics developed by the IESBA, explicitly the principles of integrity, objectivity, confidentiality and professional behaviour. He was honoured with the highest of trust by the firm and companies, of which was egregiously violated.
Insider trading is also a clear form of violation of property rights. Information is a scarce commodity and has therefore all the characteristics of a “property”. Material non-public information that was revealed to Shaw was considered vital and an intangible property of the company, and should never have been misappropriated and misused for personal gains. This is seen as a form of theft. Hence concluding that insider trading practice from a deontological ethics perception is undoubtedly unethical.
My analysis of insider trading from a utilitarian point of view similarly justifies the action as an immoral and unethical one. Utilitarian ethics is referred to as a “consequentialist” approach, which sees that the motivation for action is insignificant as compared to the action results. Utilitarian ethics summarised in a concise definition would be a decision made based on which the desired outcome is the greatest amount of good possible. "It is the greatest happiness of the greatest number that is the measure of right and wrong" (Jeremy Bentham). It is focused on maximising good on the whole; the good of one’s self as well as the good of others, and to diminish suffering.
London and Shaw are the primary stakeholders in this circumstance, whereas the other...

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