Insider trading as an incentive for workers

As well as the economic argument for legalizing insider trading, Marine put forward another argument, which is that insider dealing should be used as an incentive for the personnel of conglomerates (McVea, 1993, p. 51). He believes that since managers and directors contribute to a great extent to the increase of the organization’s wealth, salaries are not adequate to reward them. He therefore believes that they ought to be able to take advantage of the information that they exclusively possess to trade in the company’s shares (ibid.). Otherwise ‘innovation’, which increases profits and is essential to any company’s success, would not be encouraged and therefore the company would be worse off (ibid.). This scheme of rewarding managers and directors, although it will increase their income quite substantially, will not necessarily boost the company’s performance. An insider can make use of both good and bad news. Use can be made of the good news by buying, and of the bad news by selling. Here a manager will benefit from generating bad news to the company by avoiding loss (ibid., p. 52). This means creating a kind of rewarding scheme that is not ‘commensurate with effort’, which should be the basis of any rewarding scheme (ibid.). Furthermore, using trading upon insider dealing as a perk or a scheme of rewarding is extremely unfair. This can be seen when considering that confidential information is provided to an employee as a result of his or her position regardless of his/her contribution to this information. For example, a manager who has been performing very badly is likely to come across price-sensitive information and trade upon it. At the same time, another employee who has been performing extremely well may be unable to access the same information. This means that employees will be rewarded according to their position and regardless of their actual performance. Again and for the above reasons, Marine’s argument cannot justify legalizing insider dealing.

The ‘impossibility’ of effective regulation of insider trading

Finally, the advocates of unregulated insider dealing argue that insider dealing cannot be regulated properly and it is impossible to have effective regulation, thus it should not be regulated. Insider trading is a very complex crime and detecting it can be impossible in some cases. For example, the defendant can claim that they did not know that the information was price-sensitive or they may argue that they would have traded even if they had not known about the information (Cole, 2007). This makes successful prosecution extremely difficult. Margaret Cole (2007), the director of enforcement at the FSA, conceded that prosecuting an insider is extremely challenging. She stated that not only proving the elements of the crime is difficult, but also ‘the practical challenges of presenting complex insider dealing cases to a jury are immense’ (ibid.). However, while Marine sees this obstacle s a justification to legalize insider dealing, Margaret Cole does not. McVea (1993, p. 57) summarized Marine’s argument as ‘anti-insider dealing law is unenforceable; unenforceable law is a bad law; bad law should not be on the statute books’. Then McVea (ibid.) criticized Marine’s argument by stating that ‘partial enforcement’ on undesirable actions such as insider dealing is better than not having any restrictions. McVea’s argument seems to suggest that even if it is impossible to control insider dealing, it is still an immoral activity and regulators should not approve of it by not criminalizing it. Furthermore, despite being a really difficult crime to detect, insider trading can be tackled. This will not be achieved by the capacity to prosecute every insider, rather it may be accomplished through preventing insider trading from occurring. In other words, a proactive approach may well be the remedy to this obstacle.

A proactive approach

The introduction of a proactive approach aims to reduce the occurrence of insider dealing as much as possible. This can be achieved by restricting the flow of information between conglomerate departments. For example, information gained by the marketing division should not be passed on to the investment division. This restriction may have a negative effect on financial conglomerates as it will restrict the liaison between internal departments, but not to the extent that it should be abandoned (McVea, 1993, p. 350). Furthermore, this policy will be effective in terms of reducing insider dealing among financial conglomerates rather than all the quoted companies and individuals involved. This can be complemented by a more holistic approach which is forcing companies listed on the stock market to disclose all information once they gain it. This will eliminate the benefit of trading upon inside information as it will be known to the public immediately. Disclosure and transparency as two rules to which companies have to adhere are already imposed in many markets; however, not efficiently enough to eliminate the occurrence of insider dealing. Margaret Cole (2007), the director of enforcement at the FSA, asserts that the FSA ‘put a significant emphasis’ on proactive policies such as ensuring ‘a steady flow of information’. The FSA in this sense has accomplished encouraging results. Figures show that the level of undesirable activities, including insider dealing, plummeted from 19.6% in 1998-2000 to 2% in 2004-2005 (Cole, 2007). This reduction is clearly the result of the proactive measures. Yet, the figures also show no reduction in illegal activities when it comes to dealing upon information to do with mergers an acquisitions, and this is mainly due to the huge number of people involved in such a process, and therefore the higher likelihood of information leakage (ibid.). However, the FSA is working on coordinating between the different parties in order to overcome this issue. Despite this, the overall reduction shows that the FSA succeeded in preventing a great deal of insider dealing from taking place. This means that a proactive approach can be effective and Marine’s argument in this regard is no longer valid.

Conclusion

In conclusion, a perfect market where no kind of wrongdoing is taking place can be an unrealistic ambition. Nevertheless, market regulators ought to do their utmost in combating all forms of wrongdoing in order to provide the highest possible level of market integrity, which will attract investors from all over the world. Insider dealing as a form of wrongdoing, as previously mentioned, is rather controversial. Many lawyers and economists believe that insider dealing is efficient and beneficial not only for insiders, but also for outsiders. This argument was not compelling enough to persuade major economies such as the USA, UK and Japan to legalize the controversial crime. Rather, those countries and many others opted to fight insider trading and follow the argument that insider dealing is neither efficient nor beneficial for outsiders. When doing this, the supporters of legal insider trading believe that regulators and authorities will be spending a great deal of money and time in vain. They are convinced that even if insider trading were to be regulated, there are no means to combat it.This is mainly due to the complexity of this action and the elements that constitute it. However, although insider dealing is an extremely difficult action to detect, combating it can be achieved by preventing  it. This approach has shown great results in the UK market. Yet this policy can be developed to be more effective and less harmful to companies, as they may be affected by the restricted liaison between different departments. In other words, a proactive approach is the right solution and regulators ought to work on improving this policy in terms of both preventing insider dealing and not affecting the performance of organizations. This task, despite being extremely difficult, has to be done, as regulators ought to do their utmost to provide the highest possible level of market integrity. 

Bibliography

Boudreaux, D. J. (2003). Insider-trading prohibitions should go out of style. Retrieved  August 28, 2008, from www.ff.org/comment/com0306fasp 

Cole, M. (2007).Insider dealingin the city. Retrieved September 3, 2008, from www.fsa.gov.uk/pages/Library/Communication/Speeches/2007/0317mc.shtml McVea, H.(1993). Financial conglomerates and the Chinese Wall Regulation conflict of interest. Oxford: Claredon Press.

Suter, J. (1989). The regulation of insider dealing in Britain. London:Butterworths.

APPENDIX 2: Compiling a bibliography

Appendix 3: Self-evaluation checklist analyze the following sentences.

The work you do in this book, as well as on other aspects of your course, will help you develop these skills. Tick the appropriate box for each skill, according to how well you feel you can do this. From time to time, look again at this checklist and decide whether you have made progress with any of these skills.

Skills	Do not know about this	Find this difficult/cannot do this	Can partially do this	Can do this well
Looking for information
Identify which books/journals/websites to use
Select relevant parts of a text
Evaluate sources
Using sources
Acknowledge sources of information
Synthesize information from more than one source
Write a bibliography correctly
Avoid plagiarism
Planning/Writing
Brainstorm ideas
Plan written work
Organize text
Link ideas effectively
Summarize ideas
Paraphrase ideas
Write an introduction
Write a conclusion
Critically edit written work

*You may not require all the skills mentioned – there is some variation from department to department

Skills	Do not know about this	Find this difficult/cannot do this	Can partially do this	Can do this well
Personal study
Work independently
Manage time – meet deadlines
Oral expression
Give a presentation on my work
Discuss ideas for a project with other students
Discuss written work in a tutorial
Deal effectively with questions
IT
Access the Internet
Use search engines
Create word documents
Use PowerPoint
Organize text
Link ideas effectively
Summarize ideas
Paraphrase ideas
Write an introduction
Write a conclusion
Critically edit written work

REMEMBER – a skill improves with practice!

Appendix 4: Presentation assessment

Name of presenter
Pronunciation of sounds/words	not clear reasonably clear clear very clear
Intonation	not varied quite varied varied
Volume	too quite appropriate
Speed	too fast too slow appropriate
Eye contact	none too little reasonable good very good
Other comments

Appendix 5. Presentation Skills Workshop: Additional Resources

General

http://www3.imperial.ac.uk/graduateschool/currentstudents/onlineresources/presentationskills

Very useful videos based on the experience and advice of academics at Imperial

College in London.

http://wiki.ubc.ca/Presentation_Skills

www.ted.com

Wonderful resource for viewing presentations, which often include subtitles in a variety of languages and transcripts.

http://presentationexpressions.com

http://www.duarte.com/blog/

http://presentinenglish.com

Voice

http://library.leeds.ac.uk/tutorials/activities/presentations/voice-exercises/

Tips and Language

http://rasgas19febwiki.wikispaces.com/Presenting+in+English+by+Mark+Powell

http://www.it-sudparis.eu/lsh/ressources/Oral_Presentation_Skills.pdf

http://www.allaboutpresentations.com

http://www.slideshare.net once on site, search for presentation-related slide shows. Some are good; some are not.

Cross-cultural Communication Differences

http://platinum-training.jp/blog/?tag=cross-cultural-communications

Collection of Resources

http://www.mhhe.com/socscience/english/tc/pt/oral/resources2.htm

*Note: some of the links included are out of date.

http://www2.le.ac.uk/offices/ld/resources/presentation

Visuals

http://www.garrreynolds.com/preso-tips/design/

http://noteandpoint.com

http://www.sliderocket.com/blog/2010/08/incredible-presentations-presentation-methods

Appendix 6. Choose a general topic for your essay and narrow it.

1. Tourism in Kazakhstan nowadays

2. Management training: People Management, Process Management.

3. The modern economy of Kazakhstan and its stability

4. Importance of scientific research in your specific area.

5. Modern tourism issues around the world

6. Global financial crisis

7. Local authorities and impact of their activity

8. Famous people in the world economic and financial fields

9. Management training: Project Management and Personal Management

10. Accountancy and business issues.

Appendix 7. Academic Style

Practice with the First 5 Style Recommendations

They are:

1. Don’t be wordy and complex. Express meaning directly and in as few words as possible to get your meaning across. Reduce unnecessary words.

2. Use clear and direct writing to convey your meaning.

3. Try to use active voice whenever you can.

4. Start with a substantive subject. “There” or “it” + a form of the verb “to be” often gives you a “round-about” sentence structure with too many words.

5. Avoid nominalizations.

How can these sentences be reduced or made clearer?

1. Any student who wishes to join the class should meet with the professor first.

2. Hawaii, which is comprised of several islands, is popular with tourists who come from all over the world.

3. I need some advance warning about water shut-offs in my apartment building.

4. Please assemble together the pages of this document.

5. In the management of natural resources an important role is now given to the government.

6. It was the final goal of the game that determined the state championship.

7. There were two students at my summer camp who had severe psychological problems.

8. I will now make a few observations concerning the matter of faculty salaries.

9. The milk bottle was slammed into the wall by John.

10. The current focus of the ENU administration is raising its QS university ranking.

11. The detective conducted an investigation of the crime.

12. The intention of the jury is to reach a decision.

13. The delay of the flight was caused by the storm.

14. The decision to construct a health science building was made by the university rector.

15. The procedural change resulted in an increase in enrollment and retention of students.

Practice with Style Recommendations 6-10

6. Avoid noun strings.

7. Avoid unclear pronoun reference.

8. Use parallel constructions.

9. Construct your paragraphs according to the basic principles of academic writing.

10. Use transition words and phrases appropriately.

How can these sentences be reduced or made clearer?

1. The human resource development project newspaper deadline is Friday at 4:00.

2. Because Senator Martin is less interested in the environment than in economic development, he sometimes neglects it.

3. The tribes emphasized survival, aid, and being responsible for one another.

1. Coach Thompson was a brilliant strategist, a caring mentor, and friend.

2. Formerly, science was taught by the textbook method, while now the laboratory method is employed.

3. When Jim’s son was a year old, he decided to get married again.

4. John worked in a national forest last summer, which may be his career choice.

5. The soldiers burned a refugee camp as a result of the earlier attack. This was the cause of the war.

6. It was raining hard; on the other hand, I went outside for a long walk because I needed the exercise.

7. American women have been dyeing their hair for years. American men, nevertheless, only recently started coloring theirs.

Appendix 8. Problems with parallel structure

Related sentence parts, such as items in a series, must be presented in parallel form. Correct the nonparallel elements in the following sentences: She was healthy, wealthy, and a regular reader of my column. He was handsome, brave, and the sort of person who would do anything for you. The Budget Information System is a query system, the database is small, and we need to recognize the fact that the response time is unacceptably long. Declining trees have a higher probability of branch failures and of dying prematurely. In the facility construction stage, trees are often wounded by trenching, blacktopping, changing the grade, and heavy machinery. Recreation users inflict many wounds by pounding nails into trees, lantern burns, and damaging their roots with vehicles and heavy equipment. Declaring sustainability as a goal is one thing; putting it into operation has been an elusive goal. The room was beautiful, the service impeccable, and I've never tasted better food in my entire life. You are not only responsible for organizing the conference, but we also want you to introduce the keynote speaker. 10. To assess your effectiveness as a writer, consider whether your writing: 1.  Conveys your message with clarity, emphasis, precision, and style. 2.  Uses variety in sentence structure for good stylistic effect. 3.  Provides organized, coherent, logical, insightful development of the subject. 4.  Supports your main points with specific, detailed, compelling examples and illustrations. 5.  You commit no significant errors in grammar, usage, spelling, and punctuation.