training presentation on shareholder crimes
DESCRIPTION
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In this PPT you will get the answer of the following assignments:
You are the new training manager for a large corporation that offers employees the opportunity to purchase company stock directly through their paychecks. Using the following scenario and other recent real-life examples, develop a training session for the employees of the company. The goal of the training session is to accomplish the following:
Shareholder crimes
Identify the crime.
Explain what federal agency would prosecute the crime.
What punishment(s) could be enforced?
Provide other real-life examples of people who have committed this crime.
SCENARIOJack and Diane are married and both executives
at Electro-Source, a large multinational electronics company. The couple holds substantial Electro-Source company stock and the majority of their retirement funds depend on company stock performance.
Jack is a director within the marketing division and Diane is a vice president in charge of all North American sales. One Friday, Jack advises Diane that the company lost a large government contract for new electronic components.
The contract was worth over US $1 billion in sales and the loss could signal large layoffs. Government officials have not publicly announced their contract decision; however, they have advised (privately and confidentially) several non-winning bidders, including executives at Electro-Source.
Jack and Diane decide to immediately sell the majority of their company stock to protect their retirement savings.
. The market on that Friday was favorable toward Electro-Source stock as earlier reports indicated that Electro-Sources was a finalist for the contract; however, as stated, a final decision was not yet public.
Jack and Diane sell their stock to unsuspecting investors through their personal broker
Running Head: INSIDER TRADING
Training on Insider Trading
Insider Trading 1
Introduction
Case Overview
Crime: Insider Trading
Federal Agency: Security and Exchange Commission
Insider Trading 1
Insider Trading
What is Insider Trading
Impact of insider trading
Insider Trading 1
Identify the Crime
Involvement of Internal Person of Organization
Internal Information
Information use for self- interest
Insider Trading 3
(U.S. Securities and Exchange Commission, 2010)
US Regulation of Insider Trading
Section 16 of the 1934 Securities Exchange Act
Section Rule 10b-5
Section Rule 14-e3
Section 16 of the Securities Exchange Act 1934
Section 16 (a) : Disclosure Provision
Section 16 (b) : Recovery of Short Swing Profits
Section Rule 10b-5
Aspect of the Rule
Elements of the offense
Protective aspect from insider trading
Section Rule 14e-3Prohibits the insider trading during the tender
offers
Establishes a “ disclose or abstain from trading”
Is not premised on breach of a fiduciary duty
Section Rule 14e-3(a)
Section Rule 14e-3(d)
Punishment for the Insider Trading The punishment for the insider trading are:
Penalties
Imprisonment
Example of The Insider Trading Martha Stewart’s Insider Trading Case (Haffmen
& Drew, 2007)
Perot Systems Insider Trading Case (U.S. Securities and Exchange Commission, 2010).
Two French Citizens Insider Trading Case (U.S. Securities and Exchange Commission, 2010).
References Kennon, J. (2010). Understanding Insider
Trading. Retrieved March 2, 2010. From http://beginnersinvest.about.com/cs/newinvestors/a/102702a.htm
Bartos, J.M, (2006).United States securities law: a practical guide (3rd ed.). Kluwer Law International.
Jhonson, P.M. & Hazen, T.H. (2004). Derivatives regulation. Aspen Publishers Online.
Steinberg, M.I, (1984). Securities regulation: liabilities and remedies. Law Journal Press.
ReferencesHaffmen & Drew. (2007). Martha Stewart's
Insider Trading Case: A Practical Application of Rule 2.1. Retrieved March 2, 2010. From http://www.allbusiness.com/legal/banking-law-banking-finance-regulation/8908385-1.html
U.S. Securities and Exchange Commission, (2010). Retrieved March 2, 2010. From http://www.sec.gov/news/press/2009/2009-275.htm
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