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Insider Trading Enforcement
By Miriam Schulman
These are the elements of insider trading, according to Craig D. Martin, an attorney specializing in SEC enforcement and DOJ matters, corporate investigations, and private securities litigation.
Martin and Adam Reeves, deputy chief of the economic crimes section of the Northern California US Attorney's Office, spoke at the Spring 2012 meeting of the Center's Business and Organizational Ethics Partnership about the history, jurisprudence, and enforcement of insider trading.
Martin acknowledged that there were arguments against enforcing rules against insider trading. Such trading, he said, contributes to price efficiency in the markets. Besides, enforcement is inefficient and costly, and can chill legitimate behavior. However, from an ethical point of view, insider trading raises the issue of fairness because it allows some people to benefit from knowledge that is not generally available in the market, making the playing field anything but level.
Reeves and Martin gave the group a 10-point plan for reducing the risk of insider trading. Insiders should:
Miriam Schulman is the assistant director of the Ethics Center.