Insider Trading Research Paper Example | Topics and Well Written Essays - 250 words

Insider Trading - query Paper ExampleIn Martha Stewart case, Martha avoided a loss of $ 46000 by selling her shares which is duly covered by the fine she was subjected to Moreover, she lost a great deal of money as a tradeoff for her lawful troubles. Furthermore, Martha Stewart Living Omnimedias stock price fell and Martha was banned to serve as an officer or director of a public company for five years. Peter Ba laughingstockovic, on the other hand, was barred from work in securities industry along with a $ 75000 fine. These penalties are enough to set an example for the public.SEC can and should take measures to prevent such incidences before their occurrence. They can do so by eliminating the opportunity to insider art because no matter what the penalty, such violations are very appealing to people as their upside is passing lucrative. Research shows that the certain(p)ty of punishment, rather than its severity, as well as how particular punishments are perceived, that most gr eatly impacts whether criminal sanctions deliver a potent message to would-be lawbreakers (Berman, 18). Control person provision suggests certain internal dictations that would energise the bonding salute. By incurring bonding costs, a firms cost of capital will be cast downd. Insider trading leaves behind agency cost and since investors cannot detect insider trading inwardly a firm, they adopt a discounting method to value the firms stock that leads to a raise in the firms cost of capital. So in essence, incurring bonding cost would reduce the cost of capital which would send a strong signal to the investors that the firm has taken extraordinary measures to control insider trading. So in short SEC should impose the control person provision which would encourage the activity of internal