Category Archives: Featured Research

The Extent and Intensity of Insider Trading Enforcement – an International Comparison

by Lev Bromberg, George Gilligan, and Ian Ramsay

Insider trading, a form of misconduct criminalized in many countries, was again in the headlines recently with the U.S. Federal Bureau of Investigation’s “Operation Perfect Hedge”, an investigation relating to hedge funds which uncovered interweaving webs of trading networks spanning several industries. Indeed, the operation at one point provided the U.S. authorities with a perfect record of 85 convictions for insider traders. The convictions of those involved – including Galleon founder Raj Rajaratnam and former S.A.C Capital Advisors portfolio manager Mathew Martoma – resulted in record prison sentences and monetary fines for insider trading. But how do these significant insider trading penalties compare with those imposed in other countries?

Our recent article, The Extent and Intensity of Insider Trading Enforcement – an International Comparison, presents the results of a detailed comparative empirical study of sanctions imposed for insider trading in Australia, Canada (Ontario), Hong Kong, Singapore, the United Kingdom, and the United States over a seven year period to 2015. Continue reading

Does Shareholder Litigation Deter Insider Trading?

by C.S. Agnes Cheng, Henry He Huang, and Yinghua Li

Our research explores whether shareholder securities litigation can deter informed insider trades for both defendant firms and their peers. Corporate insiders have an information advantage over other market participants and can exploit this advantage by engaging in informed insider trades to obtain private benefits. These trades undermine the confidence of outsider shareholders in the fairness of the equity markets and reduce their participation. Consequently, regulators and investors have made it a top priority to constrain informed insider trades. However, in light of high litigation costs, it is important to question whether securities litigation can in fact constrain informed insider trades.

In a recent paper, we examine whether the level of informed insider trades decreases after the filing of Section 10b-5 federal private securities class actions, and whether this decrease is contingent on the merits and rigorousness of the litigation. Continue reading