NEWSLETTER
Enter your email address below to subscribe to our newsletter.
Membership Benefits!
- Get Free Stock Picks in your email.
- Penny Stock Picks poised for growth.
- Well researched Best Penny Stocks.
- Hot Penny Stocks can make you rich!
- Get Growth Stocks.
Join now!
- Penny Stock Picks poised for growth.
- Well researched Best Penny Stocks.
- Hot Penny Stocks can make you rich!
- Get Growth Stocks.
Testimonials
"I have been geting stock picks from these guys for a while and they have been dead on for most of these stocks. Thanks for the great stocks."
John Daly
"Very helpful information in all the emails, and think these guys have the best stock picks from any other sites. Would recommend them to traders of all experience."
Jason Fink
Latest Articles
Insider Trading: Who are affected?
One does not truly appreciate the impact of insider trading to the economic landscape as well as the trading behavior of those involved in the securities market if one does not look into the actors that could possibly be affected by insider trading laws. All of us can probably imagine who gets affected now that insider trading is declared by the government as unlawful. But have you ever wondered who will get affected once insider trading is not declared unlawful? Legal scholars and economists today are debating on whether it would be more beneficial for all if insider trading were made lawful. The focus of this article is not to answer the debate but rather to show who the will be affected once insider trading is made legal.
The agents that would be mostly affected by the legalization of insider trading laws can be grouped into the following categories: the insiders, the market professionals or informed non-insiders, the liquidity traders and the investors. Who can be considered the insiders? The concept of ‘insider' is more complicated than most people think, but for purposes of this article, an insider is a person who obtains private and material information regarding the corporation by virtue of their employment. They are usually the company's directors, executive officers or any other employee of the corporation that was able to obtain non-public and confidential data. Market professionals, on the other hand, are those that are also informed about the corporation but are not insiders. They have obtained the private information about the corporation through their own resources. Unlike the corporate insiders, the market professionals do not have a fiduciary obligation with the corporation. Market professionals are the brokers, the arbitrageurs as well as the securities analysts.
Liquidity traders are also sometimes called “noise” traders because they trade in the stock market for the short term. They often have a small percentage of the company's shares of stocks and they trade this not because they are interested in the corporation's prospects but to be able to balance their portfolios or to hedge. Investors, on the other hand, are stock market participants who trade for the long haul. They may own a large percentage or a small percentage of the company's shares of stock but they all have an investment objective. Investors buy and hold a company's stock to earn more profits. Investors may not be informed of any private data but they hold a significant interest in the performance of the company.
Insiders will be affected by legalized insider trading laws because they are the persons that would most benefit in insider trading in terms of profits. Also, the managers of the corporation would be getting less salary as they are expected to earn more in insider trading. Liquidity traders are affected as they would be the ones to incur a significant amount of loss if they were to trade against other agents that have more information. Market professionals will also be affected by legalized insider trading as they would be forced to go against the insiders in terms of trading. In the long run, these market professionals would be driven out of the market because of the stiff competition. Investors would also be greatly affected especially in terms of the profits they get from trading as well as their policies as shareholders.
The agents that would be mostly affected by the legalization of insider trading laws can be grouped into the following categories: the insiders, the market professionals or informed non-insiders, the liquidity traders and the investors. Who can be considered the insiders? The concept of ‘insider' is more complicated than most people think, but for purposes of this article, an insider is a person who obtains private and material information regarding the corporation by virtue of their employment. They are usually the company's directors, executive officers or any other employee of the corporation that was able to obtain non-public and confidential data. Market professionals, on the other hand, are those that are also informed about the corporation but are not insiders. They have obtained the private information about the corporation through their own resources. Unlike the corporate insiders, the market professionals do not have a fiduciary obligation with the corporation. Market professionals are the brokers, the arbitrageurs as well as the securities analysts.
Liquidity traders are also sometimes called “noise” traders because they trade in the stock market for the short term. They often have a small percentage of the company's shares of stocks and they trade this not because they are interested in the corporation's prospects but to be able to balance their portfolios or to hedge. Investors, on the other hand, are stock market participants who trade for the long haul. They may own a large percentage or a small percentage of the company's shares of stock but they all have an investment objective. Investors buy and hold a company's stock to earn more profits. Investors may not be informed of any private data but they hold a significant interest in the performance of the company.
Insiders will be affected by legalized insider trading laws because they are the persons that would most benefit in insider trading in terms of profits. Also, the managers of the corporation would be getting less salary as they are expected to earn more in insider trading. Liquidity traders are affected as they would be the ones to incur a significant amount of loss if they were to trade against other agents that have more information. Market professionals will also be affected by legalized insider trading as they would be forced to go against the insiders in terms of trading. In the long run, these market professionals would be driven out of the market because of the stiff competition. Investors would also be greatly affected especially in terms of the profits they get from trading as well as their policies as shareholders.
Featured Links
Copyright © 2008 zeba5 LLC