Showing papers on "Electronic trading published in 1982"

Insider Trading and the Dissemination of Firms' Forecast Information

Abstract: It is generally supposed that corporate insiders have access to information superior to that of outsiders. Empirical work on insider trading by Jaffe (1974) and Finnerty (1976a, 1976b) has found that insiders do earn higher returns on their shareholdings than outsiders, on average. Further, insiders in different managerial positions appear to earn differential abnormal returns (Baesel and Stein 1979).1 Investors subscribe to services which summarize insider trading activity2 and act on the information released in the SEC's Official Summary of Insider Trading (Jaffe 1974). This evidence suggests that insiders do indeed have superior information and use that information in trading in their firms' securities. This paper investigates more directly the link between observed insider information and insider trading and also the link between insider trading and information-dissemination activities. The tests reported here examine the security trading of corporate insiders around the time they make public announcements about their

Law and Practice with Respect to Insider Trading and Trading on Market Information in the United Kingdom

Abstract: At last insider trading in the U.K. is a crime! It took us nearly fifty years to catch up with the United States in this respect but, you may say, that is par for the course in all aspects of our life. Until 1980 insider trading was in the province of the self-regulatory system: during the 1970s any sanction against an insider dealer was generally imposed by the Take-over Panel. For many years there was a growing demand that the government should legislate to make insider dealing a crime. As long ago as February 1973, the Stock Exchange and the Take-over Panel advocated legislation. Due to a strange quirk of fate (two governments falling while Companies Bills were before Parliament) it took three attempts by government for the provisions to reach the statute book. The provisions on insider dealing contained in the Companies Act 1980 (sections 68-73) came into force on June 23, 1980. The essential feature of the Act is that it makes it a crime for certain persons to breach faith by dealing in securities where they have \"unpublished pricesensitive information\". These persons are individuals who are knowingly connected with a company at the time of dealing, or at any time in the preceding six months, and individuals who receive information from connected individuals (i.e. tippees). Connected persons include directors, officers, or senior employees of the company and the company's professional advisers. Shareholders of a certain percentage or more of shares in a company are not, per se, connected persons. Both a connected person and a tippee are prohibited not only from dealing but also from counselling anyone to deal or from communicating the unpublished price-sensitive information to anyone who might reasonably be expected to deal in the relevant securities. Individuals connected with one company are also prohibited from dealing on the basis of unpublished price-sensitive information in the securities of another company, if they have acquired the information because they are connected with the first company.