Table of Contents

Research Handbook on Insider Trading

Research Handbook on Insider Trading

Research Handbooks in Corporate Law and Governance series

Edited by Stephen M. Bainbridge

In most capital markets, insider trading is the most common violation of securities law. It is also the most well known, inspiring countless movie plots and attracting scholars with a broad range of backgrounds and interests, from pure legal doctrine to empirical analysis to complex economic theory. This volume brings together original cutting-edge research in these and other areas written by leading experts in insider trading law and economics.

Chapter 14: Insider trading: what is seen and what is not seen

Alexandre Padilla

Subjects: economics and finance, economic crime and corruption, law - academic, company and insolvency law, corporate law and governance, corruption and economic crime


After handing an eleven year jail sentence to Raj Rajaratnam, Federal District Court Judge Richard J. Holwell commented that “insider trading is an assault on the free markets,” adding that “his crimes reflect a virus in our business culture that needs to be eradicated.” More recently, the Wall Street Journal reported that the FBI was building cases on 120 people for illegal insider trading. In addition, the FBI released a new public-service announcement against insider trading featuring Michael Douglas. Douglas, of course, famously portrayed Gordon Gekko in Oliver Stone’s movie, Wall Street, which character was largely inspired by Ivan Boesky, one of the (in)famous convicted insider traders of the late 1980s. In this public-service announcement, Douglas introduces himself as the actor who played Gordon Gekko. Douglas adds that, while the movie and his character were fictional, the problem is real and he encourages contacting the local FBI office to report insider trading.

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