Insider Trading

In: Business and Management

Submitted By zeinakaram
Words 1145
Pages 5
Insider trading is experiencing major cases, which include Marvericks’ Owner trials with the Securities and Exchange Commission, criminal trial of Expert Network James Fleishman and the trial of a former Goldman director. Goldman Sachs Group Inc.’s board and other boards controlling the companies affiliated to Insider Trading have failed to control business issues in the companies. In some cases, the boards have interfered with the functioning of the Insider Trading through the manner in which they make decisions. Boards have been involved in making decisions and approving some deals in the company, which resulted into the cases. A good example is the Goldman case where the board approved the deal at a time of financial crisis. Some directors helped each other in acquiring deals within a few minutes which led to illegal business deals.

Different nations have enacted laws concerning insider trading in control of the roles played by boards of directors. In Canada and USA, there have been considerable changes in the laws concerning securities in the business (Foster, 1996). The federal legislation regulates the securities trading and contribution of boards and CEOs in different sections. The subsequent judicial decisions introduced in the business outline the main roles of the insider trading regulations. In the regulations, boards monitor operations in the business, as well as operations of CEOs. The Securities Exchange Act enacted in 1934 regulates secondary trading and also outlines board responsibilities (Foster, 1996). The Act outlaws any form of purchase manipulation and deception that can be brought about by wrong decisions.
Based on the enacted laws, a board of directors forms the most important organ concerned with internal governance of a business (Carlton & Fischel, 1983). The board has the responsibility of advising and also monitoring the management…...

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