Insider Trading Case Study

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1. Albert has committed insider trading by accepting information from his uncle that was obtained illegally. This is also highly unethical to use this information. The second unethical behavior Albert conducted was to ignore or not say “no” to Barry’s offer to put through his and Mary’s trades before other clients and also illegal. Albert should not have traded his uncle’s and his uncles friends’ stocks into high-risk markets. This was illegal as well as unethical and may be a violation of the “consumer protection law” since Allen did not have permission to trade in non-risky stocks. The Federal Trade Commission (FTC), another governing body, may, work in tandem with the SEC to investigate the wrong doing in this case since it involves …show more content…

Using the information that clients have disclosed when intoxicated is unethical because the clients do not have the control of their faculties to control how much or what information they are divulging. It is not clear as to whether or not Albert is directly involved in the IPO’s or if he just watches for new IPO’s to emerge on the market and notifies his clients. However, if he is directly involved in the IPO’s and gives his clients information about them, this is illegal and considered inside trading. Albert could face criminal charges if he is involved in this activity. Criminal suits are filed and prosecuted in a federal or State court (Ferrell, Fraedrich, & Ferrell, 2011, p. 96). Albert’s supervisor’s request to buy stocks and he would “pay the taxes and give [Albert] a little bonus for Christmas (Ferrell, Fraedrich, & Ferrell, 2011, p. 122)” is very suspicious. At the very least it would be against core practices in the stock market. Core practices are “documented best practices often encouraged by legal and regulatory forces as well as industry trade associations (Ferrell, Fraedrich, & Ferrell, 2011, p. 93)”. This could very well be unethical, a conflict of interest or insider trading depending on why his supervisor wants him to buy this

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