Illegal Insider Trading

Publication Year:
2017
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Repository URL:
http://digitalcommons.lasalle.edu/ecf_capstones/18
Author(s):
Presto, Christian
thesis / dissertation description
According to the U.S. Securities and Exchange Commission illegal insider trading is defined as "buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading violations may also include "tipping" such information, securities trading by the person "tipped," and securities trading by those who misappropriate such information." (US Securities and Exchange Commission, 2013). As time progresses individuals and companies are in need of the most current information in order to execute trading strategies. Some individuals and organizations are willing to pay others for insider information or even steal material non-public information in order to gain an unfair advantage over others in the market.According to Donald Creesey's fraud triangle it is believed that the likelihood that someone will commit fraud is increased when they are pressured to commit fraud, there is an opportunity to commit fraud, and they rationalize the need to commit fraud. If we understand what may lead to someone to commit illegal insider trading we will be able to understand how to reduce the risk of illegal insider trading.Based on professional experience with the protection of material non-public information and the surveillance of employee brokerage accounts, along with my academic experience in the Economic Crime Forensics program at La Salle University I will discuss the problems and costs that illegal insider trading has on society.Ultimately this capstone project will present a guide for companies to use to build a surveillance program that will protect their material non-public information from those who wish to use the information to gain an unfair advantage. I will also propose methods as to how to detect, investigate, and mitigate the risk of illegal insider trading.