ABSTRACT
This chapter introduces corporate liability for insider trading and discusses the rationale for the prohibition of insider trading. The regulation of insider trading is a controversial and complex area of corporate law. In essence, insider trading is the act of trading in financial products while in possession of relevant non-public, price-sensitive information. Despite the widespread adoption of insider trading laws internationally, insider trading has a reputation as a notoriously difficult offence to successfully detect and prosecute, and the regulation of insider trading continues to be the subject of ongoing debate. In order to understand the intended operation of insider trading laws, the reasons for its prohibition must be considered. There are four primary reasons variously identified as the possible bases for the prohibition of insider trading: market fairness; market efficiency; fiduciary duty; and misappropriation. The chapter also presents an overview of the key concepts discussed in this book.
