Ethics In Insider Trading: An Analysis From A Deontological Perspective

Abstract

From the time of inception of the new world order and from the beginning of the stock market itself, we have seen cases of insider trading which have had severe impacts on the style and strategies of investing. Insider trading is the trading of a public company's stock or other securities such as bonds or stock options based on material, non-public information about the company. In various countries, some kinds of trading based on insider information are illegal. This is because it is seen as unfair to other investors who do not have access to the information, as the investor with insider information could potentially make larger profits than a typical investor could make. In this paper we discuss the various aspects of insider trading, the steps taken by various regulatory bodies to curb the practice. It also discusses some popular cases of insider trading which led to formulations of stringent laws. The paper analyses Ethics in Insider Trading from a Deontological Perspective to highlight what should be the best ethical practice.