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Difference between revisions of "Insider trading (Global)"
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'''''Original text: Ilja Viktorov, Department of Economic History, Stockholm University''''' | '''''Original text: Ilja Viktorov, Department of Economic History, Stockholm University''''' | ||
'Insider trading' in financial markets refers to trading in securities such as equity and bonds by market participants who have access to exclusive information about the issuer of a particular security before such information is released to the general public. This allows insiders to benefit from buying or selling shares before they fluctuate in price. | |||
The longest prison sentence for insider-trading in the United States—11 years—was handed down in 2011 to hedge-fund manager and billionaire Raj Rajaratnam. Following this case, in 2012 the American judiciary found Rajaratnam’s business partner Rajat K. Gupta (former Goldman Sachs director and CEO of global consultancy firm McKinsey & Company) guilty of leaking non-public corporate information to Rajaratnam. Gupta was sentenced to two years in prison for conspiracy and securities fraud. Access to insider information had enabled Rajaratnam to make profits on trading stocks (and to avoid losses) to the tune of US$64 million, part of these gains resulting from Gupta’s tips (Raghavan 2013)<ref>Raghavan, A. 2013. The Billionaire's Apprentice: The Rise of The Indian-American Elite and The Fall of The Galleon Hedge Fund. New York: Business Plus</ref>. | The longest prison sentence for insider-trading in the United States—11 years—was handed down in 2011 to hedge-fund manager and billionaire Raj Rajaratnam. Following this case, in 2012 the American judiciary found Rajaratnam’s business partner Rajat K. Gupta (former Goldman Sachs director and CEO of global consultancy firm McKinsey & Company) guilty of leaking non-public corporate information to Rajaratnam. Gupta was sentenced to two years in prison for conspiracy and securities fraud. Access to insider information had enabled Rajaratnam to make profits on trading stocks (and to avoid losses) to the tune of US$64 million, part of these gains resulting from Gupta’s tips (Raghavan 2013)<ref>Raghavan, A. 2013. The Billionaire's Apprentice: The Rise of The Indian-American Elite and The Fall of The Galleon Hedge Fund. New York: Business Plus</ref>. | ||