Chapter 5: Insider Dealing by Andrew H. Baker
5. Insider dealing Andrew H. Baker* Two of the largest and most successful securities markets in the world, the USA and the UK, provide the benchmark for the regulation of insider trading.1 5.1 INTRODUCTION Gordon Gekko said ‘the most valuable commodity I know of is information’.2 The quote is from a fictional Hollywood character but that character was apparently based on real persons engaged in the securities industry during the 1980s, and whatever the fiction, the fact remains that information is one of the most valuable commodities in the financial services industry.3 Indeed, McCoy and Summe took the view that during the 1980s ‘insider trading scandals occupied the front pages of not only the trade papers, but also quotidian tabloids. Assailed for its unfairness and characterised by some as thievery, insider trading incidents increased calls for stricter regulation of the market-place and its participants’.4 Insider trading, as referred to in the United States (US), is referred to as insider dealing in the United Kingdom (UK) and it can be defined as ‘the unfair use of material, non-public information concerning an issue of securities – [it] threatens to undermine the integrity of the national securities mar- Liverpool John Moores University, Law School. McCoy, K.A. and Summe, P. (1998), ‘Insider trading regulation: a developing state’s perspective’, Journal of Financial Crime, 5(4), 311–346, at 311. 2 This quote was also used as a title to an article by Burger, R. and Davies, G. (2005a), ‘The most valuable commodity I know of is...
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