Wall Street Journal - Research Paper Example

Discussion Insider trading has been viewed to be one of the common and widespread issues in this modern financial market. There were many cases that were reported regarding inside trading. According to an article written by Bray (2013), former director of Goldman Sachs named Mr. Rajat Gupta was accused of being involved in a case relating to the issue of insider trading. Mr. Gupta was being convicted for sharing business secrets that he has learnt as a board member of the company with hedge-fund executive named Raj Rajaratnam and other business members. Mr. Gupta was sent for a two year imprisonment for conducting this unlawful offense.

It has been apparently observed that the issue of insider trading is highly unethical. People would be benefited from using insider information but it is not morally correct. It has been viewed from the article that apart from the imprisonment, Mr. Gupta would also have to repay $6.2 billion in regard to legal fees and expenses occurred linked with the case of insider trading. It is quite significant to understand that insider trading is regarded as an unlawful as well as unethical activity as this affects the performance of the businesses by a greater level.

It is ethically not correct for Mr. Rajat Gupta to conduct such practices as it violates the duty of trust as well as confidentiality of the company. Moreover, it has been observed that the penalty that has been imposed over Mr. Gupta is completely on the basis of the proofs that were presented on the court2. In this similar context, there pertains other case relating to the critical issue of insider trading. According to the case, it has been observed that the younger brother of Raj Rajaratnam named Rengan Rajaratnam was accused for conducting the activity of insider trading.

In this similar concern, it has been viewed that he was mainly accused due to sharing valuable business information particularly to Clearwire Corp. as well as Advanced Micro Devices Inc. It can be affirmed that by conducting this practice, he violated the confidentiality of the company that can be regarded as immoral as well as illegal. He made a profit of $1.2 million illegally from performing the activity of insider trading. The information about the illegal conduct that performed by Rengan was observed by the Foreign Bureau of Investigation (FBI) from the telephonic conversation that was recorded between Rengan and one of his friend.

Also, it would be worth mentioning that insider trading effects economy and might also lead to market crash at large3. Again in an article presented by Rothfeld, Eaglesham and Bray (2013), it has been noticed that one of the most well known investment firms i.e. SAC Capital Advisors LP would have to pay a huge amount of money for involving in two particular cases of insider trading. It has been apparently observed in this particular circumstance that the company has to pay more than what they have earned from the conduct of insider trading as a penalty.

Also, it has been viewed that a few of the employees of the company have been convicted relating t the case of insider trading in the past few years. Investigations revealed that Mr. Steven A. Cohen (founder of SAC) was guilty of sharing important inside information to Dell Inc and Nvidia Corp. The shared information aided the companies to avoid a trading loss of more