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Insider Trading

 

            Insider trading is one of the most common white-collared crimes committed. Insider trading is defined as a person who trades stocks with undisclosed information that gives them the upper edge over the public. Insider trading is very lucrative and can make the person quick money or not lose money. It could compare to going to a casino and knowing what the blackjack dealer's cards are before he deals or shows them. It gives unfair advantage over everyone else since you have prior knowledge on the way the stock will move. Many famous and upper class people have used their fame and power to get the major edge on the public.
             Martha Stewart is an example of an insider trading scandal. What happens is a person who gives the information is called a tipper and the person who receives the information is called a tippee. In Martha Stewart's case, her long time friend Sam Waksal, CEO of ImClone, gave information to Martha Stewarts" daughter and her broker who then told Martha Stewart to sell her four thousand shares in ImClone. Sam Waksal had prior knowledge that ImClone's cancer drug did not get FDA approval. This information was not given to the public whenever Sam Waksal's friends and relatives including Martha Stewart sold their shares. After the FDA rejection of the drug went public, ImClone's stock dropped dramatically. The public loses money and all the tippee's make money. These actions are very concrete for most of the people involved in the scandal, but insider trading is not easily proved.
             There are many loopholes and hearsays that can come with this crime. It is very difficult to prove what information was non-public at the time and people have benefited from the information. There are always defenses of how you overheard information and your stock trading habits. Person can use defenses like "I overheard it in the break room", I read it on a message board, or person who leaks information did not have important duty in the company.


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