Insider Trading Assignment Help Insider Trading Breach Duty Insider trading is a term that most investors believe it as associated with illegal conduct. Insider trading includes both legal and illegal behavior. It is legal, if corporate insiders such as officers, directors, employees and legal shareholders buy and sell stock in their company. Corporate insiders trade in its own securities and report its trading to the Security and Exchange Commission (SEC), so it is legal form of insider trading (Macey, 2010).
Corporate insiders trading protect the interest of shareholders because top management fulfills its duty and follow all legal rules and regulations during the corporate insiders trading. As per law assignment help experts, Illegal insider trading relates to buying or selling a security in breach of a fiduciary duty or other relationship of trust or confidence as in possession of material. It is based on material nonpublic information. Insider trading violations cannot pass on information about the security or trading to the SEC (Casenote, 2009). Insider trading violations may also include tipping information of outside individuals to trade in securities based on disclosed information. It is violation of law and a fiduciary duty to safeguard the interests of their shareholders.
Martha Stewart case Martha Stewart is a part of one of American’s major insider trading scandals. Martha Steward was a shareholder of a company called ImClone system incorporated. It founded in 1984 and engaged in biopharmaceutical products. ImClone received notification about a new prescription drug, so company required extensive money into research and development. Company did not receive approval by the food and drug administration that affected financial position of the company. It decreased company stock price immediately (Rawls, 2009). Sam Waskal, the CEO of ImClone made a call to its stock broker to dump shares of the company stock. CEO notified Martha Steward to a broker to liquidate the company stock by selling-off her shares that was almost 4000 shares of the company (Price, 2007). Martha Steward was a close friend of Waksal. Waksal gave this inside information to Martha to sell ImClone shares and tipping family members to sell their shares to protect them from financial loss. On the day after, the stock price of company was tumbled by 60% due to rejection of the company’s application for a drug.
Martha Stewart Case Breach Shareholders Interest Stewart sold stocks to avoid losses and protect her interest, so that government announced public charges against her. The SEC noticed an unusual coincidence between the CEO of ImClone and Martha Steward for the selling of share because it was illegal type of insider trading (Markham, 2006). Martha Steward breached a fiduciary duty to other investors because she had not informed the other investors about the financial crises of the company. She did not care about the shareholders bearing losses that jeopardized the shareholders interest. She conducted unethical behavior by conducting insider trading actions and violated the rights of other shareholders of the company (Rawls, 2009). She sold the stocks to avoid personal losses, but it did not fulfill the fiduciary duty to safeguard the interests of other shareholders.
Case Effect on Society and Business Community Manipulating of stock price is a form of fraud that harms both society and individuals by decreasing the efficiency of capital market. Martha Steward scandal decreased the price of market that affected the society and business communities. Steward case affected reputation of market that affected the investors’ decisions. The insider trading of Steward harmed the investors. Investors not achieved its actual price and it created a difference between other investors of the country. Insider trading negatively affected the price of property or stock price of the country (May, Cheney & Roper, 2007). Insider trading creates negative image of company because top management does not fulfill fiduciary duty to safeguard the interests of their shareholders. Company paid penalty for illegal internal trading that affected its financial positions. It affected the employees, vendors, financial sources and other parties of the company. Martha Steward case is an example of white-collar crime that affected the society as people in the society, who have invested were faced the loss due to insider trading. The fraud affected the business communities through created negative image of corporate between the investors (Salinger, 2005). It affected the investors’ decision to invest in US market.
References Casenote, L.B. (2009). Securities Regulation: Keyed to Courses Using Coffee and Sale’s Securities Regulation (11th ed.). USA: Aspen Publishers Online. Macey, J.R. (2010). Corporate Governance: Promises Kept, Promises Broken. USA: Princeton University Press. Markham, J.W. (2006). Financial History of Modern United States Corporate Scandals. USA: M.E. Sharpe. May, S.K., Cheney, G. & Roper, J. (2007). The Debate Over Corporate Social Responsibility. USA: Oxford University Press. Price, J.F. (2007). Martha Stewart: A Biography. USA: Greenwood Publishing Group. Rawls, K.L. (2009). Martha Stewart and Insider Trading. Faculty Publications and Presentations, 3, 1-9. Salinger, L.M. (2005). Encyclopedia of White-Collar & Corporate Crime. USA: SAGE. Avail Martha Stewart Case Study Insider Trading Assignment Help with assignmenthelpexperts.com You will get complete and original business Martha Stewart case study assignment help from our US,UK and Australian experts.