Mar
10
Blog Post #5- Class 12- Teresa Lo
March 10, 2015 | Leave a Comment
When the world finds out about insider trading, it is like a secret has been exposed. The social media breaks out in frenzy about how a certain individual or group of individuals gets caught gaining significant amounts of money because these people had insider knowledge. What I thought was most interesting in the Martens article was when “Insiders are paid a salary and often bonuses – sometimes quite large – and should not be taking advantage of their position for additional personal gain, especially at the expense of shareholders lacking the inside information and, therefore, willing to trade their shares. Nor should they be permitted to advantage their friends and relations by tipping them to inside information as a gift. ”
Martens’s justification for making insider trading illegal could not be better said. The small portion of the rich is getting larger because the rich are getting richer, while the poor are getting poorer. This insider trading also goes hand in hand with income inequality. Because these insiders already have the opportunity of income, it is easy for these same people to take advantage of the opportunities to gain more money. Thus, people with less income won’t have the same opportunities which contributes to the argument of “do we live in a fair society?”
The same concept was mentioned in Black’s article where the “don’t ask, don’t tell” scheme was implemented. “The more sophisticated and destructive the insider trading scheme, the more the Second Circuit opinion shields the elite traders made wealthy by the scheme from prosecution. The Second Circuit adopts, celebrates, and shields from accountability Wall Street’s corrupt culture by making sophisticated insider trading the perfect crime (Black).”
It is crazy how people conducting insider trading can get away, and only a few get caught. One would think that people with insider careers are to be heavily background checked and ethically trained in the business world, especially when they are dealing with previous insider knowledge.
I think this goes to show why we have such a huge income gap in our society today. The rich are getting richer and greedy, while the poor are having all the opportunities being snatched up by the rich. When the word does leak out that there has been insider trading happen, the consequences are more or less than poisonous. It can ruin a person’s career in the trading business infinitely and potentially the companies as well. I think there should be a heavy emphasis on ethical training. Supervisors should prevent the idea from being planted in the employee’s mind before the seed even touches the ground.
