भविष्यवाणी बाजार कैसे अंदरूनी व्यापार को सक्षम बना सकते हैं

Insider trading continues to be a main concern for regulators across the globe. Originally, the problem was with traditional markets. However, the emergence of blockchain-powered prediction markets has renewed focus on how insider information can benefit those who possess the right connections or positions. Here’s what you need to know.

अंदरूनी व्यापार क्या है?

According to regulatory agencies like the SEC, insider trading is the act of using exclusive information to dictate the purchase or sale of securities. This information includes anything that provides the निवेशक with an unfair advantage, breaching the trust of the public.
Insider trading enables individuals to mitigate losses, including those resulting from scandals or poor financial performance. It also allows them to reposition for guaranteed gains, such as news of major government contracts, changes to regulations, mergers, or new technological developments.

Penalties

The current penalties emerged following decades of cases, each helping to set a precedent. Notably, the first insider trading case occurred in 1909. This case was known as Strong v Rapide, and it mandated that directors couldn’t trade using material information.

History

In 1934, the SEC officially introduced insider trading legislation, which continually matured throughout the decades, including to cover those who are associated with people in possession of material information. Today’s penalties include a lengthy prison sentence of up to 20 years, forfeiture of the ill-gotten gains, and fines up to 3x the amount you profited.

Insider Trading Statistics

Insider trading enforcement remains a priority for regulators. Each year, the U.S. Securities and Exchange Commission (SEC) brings dozens of enforcement actions related to insider trading and market manipulation. These cases typically involve corporate executives, financial professionals, or individuals who obtained material nonpublic information through personal connections.

Example of Insider Trading

One of the most common types of insider trading involves a company executive telling a friend corporate information, such as whether a merger was successful or not. The friend uses this information to buy/sell shares to secure massive gains. From there, the profits are split between the participants.
This approach makes it harder to determine insider trading because it’s not a company employee directly. As such, the SEC needs to conduct investigations to connect the trader’s unbelievable luck to more than coincidence.

Famous Insider Trading Cases

Insider trading cases happen every year. However, some cases capture the attention of the public more than others. Cases involving a major celebrity or cases where the amount gained is in the hundreds of millions usually fit this description. These cases attract international attention, spurring additional support and funding for anti-insider trading efforts.

Martha Stewart

A recent example involves Martha Stewart. She is famous for several reasons, including her magazines and shows, which featured lifestyle, home, and cuisine tips. In 2001, Stewart was accused of insider trading, and in 2004, she was convicted in a case that made headlines.

Court records reveal that Stewart sold 4,000 ImClone shares on insider information regarding pending FDA approval for an experimental cancer drug. This allowed her to avoid $45,673 in losses.

However, in the long run, it cost her much more. Her penalties included 5 months in federal prison, 5 months under house arrest, and more than $200k in fines. These penalties are in addition to the embarrassment caused by the scandal.

How Prediction Markets Complicate Insider Trading Laws

The emergence of prediction markets has exacerbated the situation considerably. These non-regulated platforms enable anyone to place wagers on the potential outcome of scenarios and events.

स्रोत – Kalshi