A SMALL LEAK CAN SINK A GREAT SHIP: AN OVERVIEW OF INSIDER TRADING
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DOI:
https://doi.org/10.55662/Abstract
Insider trading is the most violent white collar crime of the security market. The scope, violations and penalties of this crime are different in India as compared to the other countries. Trading by an insider in the shares of a company by compliance of laws, rules and regulations is not considered the violation of law(s). For an instance a person is aware about the insider information but he is trading in the securities of the Company according to the trading plan, which he submitted to the company’s compliance officer at least six months before will not come under fraud or fraudulent activity. Otherwise trading/investment by directors, officers, employees and other insiders of the company in the shares of their own company is a positive feature it need be encouraged because it affects the interests of other persons who wants to invest in the company. Law only prohibits the insiders ie. Person is having UPSI within the limits of law. Insider trading violation includes "using such information about securities to make the profits by the insider which is "tipped"”. Law provides the duties and obligations to live in the society and guide the people how they can enjoy the rights by performing few duties. Same in the case of corporate world the officers of the companies need to perform some duties prescribed by law to enjoy the rights in the company. Out of them few duties are disclosure of interest, not to make secret profits, not to do Insider trading etc. The way to perform its duties in ethical manner is called the corporate governance. When we work in any corporation in unethical manner it definitely effect the efficiency of any company.
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