Insider Trading Risk Assessment Insider Term Paper

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However, it would be safer to follow general policies that are being followed even now. This means that one should pass on published information to shareholders on the Internet as it would be simpler and less expensive to send. This may include information about quarterly results, monthly turnover, changes of directors, appointment of new sales agents, general trends of markets at certain times, etc. The question would still remain as to how many shareholders would be competent enough to use this information and the passing on of information may result for the clients as an exercise of garbage in, garbage out.

5. Discuss the legal boundaries, including privacy issues. What exceptions if any exist to allow for the use of such data? If they do not exist, how would you counter the privacy advocates concerns?

Some experts believe that privacy concerns will ultimately reduce the growth of the Internet generally and electronic commerce. As it is, different countries consider privacy issues variedly, but this is for the privacy of individuals. In the U.S. companies have largely been allowed to self-regulate. In Europe on the other hand, protection of consumer privacy is the topic of wide legislation, and that includes a comprehensive Data Protection Directive that took its form in 1998. In November 2000, the Commerce Department prepared a safe harbor program for U.S. companies trying to acquire personal information from that of the European organizations. The basic need of the program is that companies do have a privacy policy addressing certain listed principles inclusive of "access; choice; notice; security; transfers to third parties; and data integrity and enforcement." (Privacy Policy Primer) Studies have revealed while an enhancing number of U.S. companies have developed privacy policies, enforcement of these policies has been found at best. (Privacy Policy Primer) The question here is of privacy of individuals in general. Regarding share trading risks and privacy, it is not clear as to what issues may come up.

6. Discuss risk mitigation strategies. These should be in the form of recommendations to mitigate the risks identified while considering the allocation of resources within the organization?

Risk management services are to provide insurance for transactions and entail information in order to help the buyer and seller to deal with delivery, price, theft, and other types of risks. These are the methods of reducing risks, and as e-commerce increases, several insurance companies now provide insurance services to reduce risks. (Is Government needed to watch online markets?) Towards the middle of the1980's, participating national regulatory institutions from the G-7 countries put together a common capital adequacy framework. The general agreement among national banking authorities was that banks in their respective jurisdictions would be asked to hold $8 in capital against each of the $100 of loans it had booked. This is again a safety measure. In June, 2004, the BIS released "Basel II," which is a lengthy and much more complex new capital adequacy framework for the purpose of wide application through the entire financial services sector. (Is Insurance a substitute for capital under the revised Basel Accord?) Thus different actions are being taken, but the ultimate safety comes from the reduction of the mad rush for profits which makes organizations try for more profits.


What has to be realized is that profit and risk are the two opposite sides of the same coin and when it is sought that profits must increase, and then risks will also increase. The opposite is also true. The risks of insider trading are also more when profits keep swinging from one side to the other like a pendulum, and principled growth will reduce the possibilities of benefits from insider trading. Ultimately, the trader has to make money fast.


Insider Trading" U.S. Securities and Exchange Commission. Retrieved at Accessed 15 October, 2005

Is Government needed to watch online markets?" (11 November, 2002) Harvard Business

School. Retrieved at,289142,sid19_gci864459,00.html. Accessed 15 October, 2005

Ivancevich, Susan; Jones, Lucian. C; Keaveney, Thomas. (December, 2002) "Don't Run the Risk" Journal of Accountancy. Retrieved at Accessed 15 October, 2005

Kavanagh, Barbara T. "Is Insurance a substitute for capital under the revised Basel Accord?"

Retrieved at Accessed 15 October, 2005

Khang, Kenneth; Dolly King, Tao-Hsien; (August, 2001) "Is Dividend Policy related to Information Asymmetry? Evidence from Insider Trading Gains" Retrieved from Accessed 15 October, 2005

Newkirk, Thomas. C. (September 19, 1998) "Speech by SEC Staff: Insider Trading - AU.S. Perspective" 16th International Symposium on Economic Crime. Jesus College, Cambridge, England. Retrieved at Accessed 15 October, 2005

Privacy Policy Primer" Retrieved at Accessed 15 October, 2005[continue]

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