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Evils of Insider trading
Rajat Gupta -First Indian-born CEO of a global Western company Rajat Gupta is additionally the co-founder of four different organizations: The Indian School of Business with Anil Kumar, The American India Foundation with Victor Menezes and Lata Krishnan, New Silk Route with Parag Saxena and Victor Menezes, and Scandent with Ramesh Vangal.
Insider trading
Insider information is information (about company strategy and plans) that someone within a company has but that is not available to those outside the company. The moral problems connected with insider information concern the use that individuals may make of such information while they are still members of the firm. Two aspect of the problem: 1. One is that of some one within the firm using information for his or her private gain, at the expense of the firm. This is called conflict of interest 2. The other is the use of insider information by someone within a firm advantage over those not in the firm. .
Example
Insider trading where a company director knows that the company is in a bad financial state and sells his shares in it knowing that in a few days time this news will be made public together with an announcement of a cut in dividend payment.
Likewise, the director would be insider dealing if, on being informed before it was generally known by the public, that the company has discovered oil or gold on its own land, he bought more shares in the company in the not unrealistic expectation of an increase in their market value as a result of the subsequent public announcement.