Insider Trading Risk Assessment

Paper Summary:

This paper discusses how insider trading is usually inclusive of both legal and illegal conduct and also defines what forms of insider trading are legal and which are illegal, as well as the risks involved with both. This paper also discusses the importance of communication in assessing the risk of insider trading.

Content:
Introduction
Analysis
Identify the Risks to Individuals and/or Organizations
Analyze the Risks
Discuss Impact, Probability and Time Frame
Classify Risks and Prioritize Them
Discuss Financial Reporting, Operational and Compliance Risks
Discuss the Importance of Information Sharing to Develop Risk Assessment Models.
Discuss the Legal Boundaries, Including Privacy Issues.
Discuss Risk Mitigation Strategies.
Conclusion

From the Paper:

"In general, the legal view is that insider trading prevails while a person has "material, nonpublic information" regarding a security or its issuer and buys or sells that security. The SEC has specified that an individual with such inside information has to move away from trading in the securities of the company or correctly reveal what he or she knows even before buying or selling them. Those who violate these rules are subject to civil penalties of about three times the illegal profits which are being gained or losses prevented by the insider trading in addition to criminal penalties. Criminal penalties for individuals may mean a fine of as about $5 million, prison as long as 20 years or even both. Courts have also allowed injured private parties to sue for the purpose of damages. (Ivancevich; Jones; Keaveney, 2002) Thus the penalties or risks are now pretty severe."

More papers on Insider Trading Risk Assessment:

• Analytical Essay # 122784 : "Illegal Insider Trading"
• Case Study # 71963 : "Case Study: Insider Trading"
• Analytical Essay # 126841 : "Insider Trading"

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