Corporations Law and Insider Trading - Assignment Example

Download file to see previous pages Famous examples of insider trading include transacting on the advance knowledge of a company’s discovery of a rich mineral ore (Securities and Exchange Commission v. Texas Gulf Sulphur Co.), on a forthcoming cut in dividends by the board of directors (Cady, Roberts & Co.), and an unanticipated increase in corporate expenses (Diamond v. Oreamuno). Although insider trading typically yields significant profits, these transactions are still risky. Much trading by insiders, though, is due to their need for cash or to balance their portfolios. The above definition of insider trading excludes transactions in a company’s securities made on non-public “outside” information, such as the knowledge of forthcoming market-wide or industry developments or of competitors’ strategies and products. Such trading on information originating outside the company is generally not covered by insider trading regulation.” (Stanislav Dolgopolov, 2009)

Insider trading is a notable act of unprofessional ethics in business. Practically, this act differs from the intentional application of loyalty which is a practical need for many business organizations at present. The loyalty that the employees have towards their employers and the companies that they are working for becomes a serious issue when it comes to this particular consideration of professional ethics. Many business groups have already failed due to the existence of this characteristic among the most loyally recognized individuals.

The basic considerations made when dealing with this particular issue among workers in the industry at present have been less given attention to by the makers of law. In Australia, this law is a practical application that is supposed to protect the values of major organizations that are present in the business industries (Dolcopolov, 2009). This indication of the major operations of business organizations undergoing a particular path of formation and function is sometimes expected to be solely private. Only those in the administration are supposed to know about these matters hence protecting the identity of the company’s business strategies, operation approaches,s and marketing deals (ASIC, 2009). Only authorized individuals involved in the topmost information that the organization holds are the ones who are permitted to know about these matters. ...Download file to see next pages Read More