Methodology
This project ponders what Insider dealing and Market Manipulation is and how it is wrong, by way of considering what actions fall beneath these terms, in what way they are controlled as well as the past of regulatory procedures. It considers different scenarios as well as a number of arguments as to whether the standing legal situation is relevant and effective, taking into consideration prevailing academic thinking in addition to interpreting real results. Ultimately, concluding that Market Abuse is almost entirely indefensible and that the arguments for legalising Insider Dealing are ill conceived.
Introduction
The financial services industry is a major contributor to the UK economy. It is a vast employer and millions of individuals are dependent on the instruments traded to establish and uphold their savings and pensions. As a division it contains banks, insurance firms, pension funds, stockbrokers and skilled trade bodies. Whilst the recent economic crisis could have brought the actions of this industry into disrepute, there is a long antiquity of unlawful behaviour and misconduct dating back well before current happenings. These happenings can take a number of procedures with Insider dealing possibly tending to get the highest attention in both real and untrue media. The relevance, cost and result of regulating Insider dealing and what has come to be recognised as Market Abuse have been subject to considerable discussion.
What is inside information?
Inside information is material that is linked to specific securities or a specific issuer of securities and is positive or accurate; has not been made public; and if it were made public, would be likely to have a considerable influence on the value of the securities. As such, sensitive material of this kind would generally be released in an arranged manner through the London Stock Exchanges Regulatory News Service in way to create an equal playing field rather than one where a little advantaged “insiders” have a gain above others. This type of material is considered to be “Price sensitive” i.e. it is Material that has the ability of influencing a certain companies share value. By its very nature it is material that has a tendency to be known by high-ranking firm officials such as the board of Directors. Consequently various individuals are in possession of inside material on a regular basis, possession of which is perfectly valid. The wrongdoing of Insider dealing only arises depending on what they do with the material not available to everyone.
What is Insider Trading?
Definition: “The buying or selling of a security by someone who has access to material, non-public information about the security.” [1]
An "insider" is some individual who has no less than one of the following:
1) access to valuable non-public material about a firm (this makes a firm's directors as well as top executives insiders).
2) Possession of stock that matches more than 10% of a firm's...
