Jayce Writer

Nicole : Insider trading raises a few ethical dilemmas. The ethical issue of fairness arises as some people privately benefit from knowledge that is not available for public view in the market (Schulman, 2012). This makes the playing field unleveled. Those who have access to such information can use it to make strategic investment moves in the market. This is unfair to those who do not have access to the information.

I feel a good example would be eBay bidding. Have you ever bid on a product and a few hours before the item ends, some mysterious user has just increased the bidding exponentially? The secret is that the seller may have another account and uses it to increase the pricing of the item to try to get the most out of you.

There are rules that are enforced against insider trading, but some feel as though they are not ethical. Those against these rules think that insider trading contributes to price efficiency in the markets (Schulman, 2012). The same people suggest that the cost for enforcement against insider trading is expensive.

Schulman, M. (2012). Insider Trading Enforcement. Markkula Center for Applied Ethics. Retrieved from http://www.scu.edu/ethics/practicing/focusareas/business/insider-trading-enforcement.html

Richard: Insider trading is one of those most troubling ethical issues that happen all too often. In fact until recently I believe that our Congress could use insider information unavailable to the rest of us in order to buy stocks and others securities and many of them have made significant profits doing such. A year ago, President Obama signed the STOCK Act, that Bans Members of Congress from Insider Trading, banning this previous benefit to congress (White House, 2012).

This is nothing but an ethical issue because many individuals have information that the normal citizen would not have. These individuals run across a wide band of various company executives, directors’ employees and many others who are aware of some event that will either benefit the stock value or hurt it. And by acting on this inside information, they leverage this by performing a transaction that has the timing of these actions reviewed by the SEC and become part of an investigation. These type of actions do undermine consumer confidence in the markets and in the long run hurts the overall market.

It should be illegal for any person to be involved in any type of trade where they may their job be associated with having knowledge of certain securities. A typical financial person at a large investment house would certainly have access to information telling them trends and actions that would tip them off to some action they can take to benefit them. I am not sure how you manage such a situation but it does seem slanted towards those professionals, where ordinary people like myself are limited by a lack of information. When you look at the example of the Hedge Fund managers who made $60 million dollars, they were completely out of line and were caught red handed, but how many of these are not discovered.

References:

White House. (2012, April 4). FACT SHEET: The STOCK Act: Bans Members of Congress from Insider Trading. Retrieved November 18, 2013, from The White House Web site: http:/​/​www.whitehouse.gov/​the-press-office/​2012/​04/​04/​ fact-sheet-stock-act-bans-members-congress-insider-trading