Inside insider trading regulation: a comparative analysis of the EU and US regimes (2024)

Article Navigation

Volume 18 Issue 1 January 2023
  • < Previous

Journal Article

Get access

Min-woo Kang

Lecturer in Banking and Finance, Korea University of School of Law, South Korea. E-mail: minwoo_kang@korea.ac.kr

Search for other works by this author on:

Oxford Academic

Capital Markets Law Journal, Volume 18, Issue 1, January 2023, Pages 101–135, https://doi.org/10.1093/cmlj/kmac026

Published:

18 November 2022

Article history

Accepted:

03 November 2022

Published:

18 November 2022

  • Views
    • Article contents
    • Figures & tables
    • Video
    • Audio
    • Supplementary Data
  • Cite

    Cite

    Min-woo Kang, Inside insider trading regulation: a comparative analysis of the EU and US regimes, Capital Markets Law Journal, Volume 18, Issue 1, January 2023, Pages 101–135, https://doi.org/10.1093/cmlj/kmac026

    Close

Extract

1. Introduction

Insider trading (also known as insider dealing) is a type of financial misconduct that has gained traction with regulators and supervisors around the world for decades. It refers to trading in securities on the basis of corporate information that has not yet been made public and which, if publicly known, would likely have a significant effect on the prices of those financial instruments. Due to the rapid expansion of global capital markets, insider trading has continued to increase dramatically, and the spread of its prohibition has been commonly observed in most jurisdictions.1 Indeed, the 1990s witnessed ‘an explosion in the number of nations’ that have adopted laws banning insider trading, and by 2000, 87 countries had explicitly implemented their own insider trading regulations.2

The policy rationale behind the insider trading prohibition is intuitive and straightforward. When one party makes a purchase or sale of stocks while in possession of inside information that is not known to the investing public, he or she is exploiting informational advantages to the detriment of the counterparty.3 Further, information asymmetry between investors is most likely associated with the problem of market failure, which hinders the willingness to supply liquidity and raises the cost of capital, thereby resulting in inefficient market outcomes.4 For this reason, the majority of jurisdictions (including the EU and UK) require that any price-relevant corporate information should be promptly disclosed to the public and restrict insiders who fail to make full and fair disclosure from using (ie trading based on or communicating with outsiders) the confidential information. However, it should also be highlighted that there are some counterarguments claiming that such a notion is rather biased towards market egalitarianism or even those advancing that insider trading could improve informational efficiency in the stock markets and thus benefit general investors, because it would ‘more quickly introduce new information’ which is otherwise not available to the marketplace.5 This is why US securities law and courts’ interpretation thereof substantially narrows the scope of insider trading liability. That is, securities trading on the basis of material non-public information is banned in the USA, if and only if evidence proves the existence of fraud, namely that a fiduciary-like duty is breached.

Issue Section:

Article

You do not currently have access to this article.

Download all slides

Sign in

Get help with access

Personal account

  • Sign in with email/username & password
  • Get email alerts
  • Save searches
  • Purchase content
  • Activate your purchase/trial code

Sign in Register

Institutional access

  1. Sign in through your institution Inside insider trading regulation: a comparative analysis of the EU and US regimes (3)
  2. Sign in with a library card Sign in with username/password Recommend to your librarian

Institutional account management

Sign in as administrator

Get help with access

Institutional access

Access to content on Oxford Academic is often provided through institutional subscriptions and purchases. If you are a member of an institution with an active account, you may be able to access content in one of the following ways:

IP based access

Typically, access is provided across an institutional network to a range of IP addresses. This authentication occurs automatically, and it is not possible to sign out of an IP authenticated account.

Sign in through your institution

Choose this option to get remote access when outside your institution. Shibboleth/Open Athens technology is used to provide single sign-on between your institution’s website and Oxford Academic.

  1. Click Sign in through your institution.
  2. Select your institution from the list provided, which will take you to your institution's website to sign in.
  3. When on the institution site, please use the credentials provided by your institution. Do not use an Oxford Academic personal account.
  4. Following successful sign in, you will be returned to Oxford Academic.

If your institution is not listed or you cannot sign in to your institution’s website, please contact your librarian or administrator.

Sign in with a library card

Enter your library card number to sign in. If you cannot sign in, please contact your librarian.

Society Members

Society member access to a journal is achieved in one of the following ways:

Sign in through society site

Many societies offer single sign-on between the society website and Oxford Academic. If you see ‘Sign in through society site’ in the sign in pane within a journal:

  1. Click Sign in through society site.
  2. When on the society site, please use the credentials provided by that society. Do not use an Oxford Academic personal account.
  3. Following successful sign in, you will be returned to Oxford Academic.

If you do not have a society account or have forgotten your username or password, please contact your society.

Sign in using a personal account

Some societies use Oxford Academic personal accounts to provide access to their members. See below.

Personal account

A personal account can be used to get email alerts, save searches, purchase content, and activate subscriptions.

Some societies use Oxford Academic personal accounts to provide access to their members.

Viewing your signed in accounts

Click the account icon in the top right to:

  • View your signed in personal account and access account management features.
  • View the institutional accounts that are providing access.

Signed in but can't access content

Oxford Academic is home to a wide variety of products. The institutional subscription may not cover the content that you are trying to access. If you believe you should have access to that content, please contact your librarian.

Institutional account management

For librarians and administrators, your personal account also provides access to institutional account management. Here you will find options to view and activate subscriptions, manage institutional settings and access options, access usage statistics, and more.

Purchase

Subscription prices and ordering for this journal

Purchasing options for books and journals across Oxford Academic

Short-term Access

To purchase short-term access, please sign in to your personal account above.

Don't already have a personal account? Register

Inside insider trading regulation: a comparative analysis of the EU and US regimes - 24 Hours access

EUR €51.00

GBP £44.00

USD $55.00

Rental

Inside insider trading regulation: a comparative analysis of the EU and US regimes (4)

This article is also available for rental through DeepDyve.

Advertisement

Citations

Views

773

Altmetric

More metrics information

Metrics

Total Views 773

502 Pageviews

271 PDF Downloads

Since 11/1/2022

Month: Total Views:
November 2022 23
December 2022 54
January 2023 85
February 2023 58
March 2023 85
April 2023 50
May 2023 47
June 2023 46
July 2023 41
August 2023 37
September 2023 48
October 2023 75
November 2023 50
December 2023 32
January 2024 42

Citations

Powered by Dimensions

Altmetrics

×

Email alerts

Article activity alert

Advance article alerts

New issue alert

Receive exclusive offers and updates from Oxford Academic

Citing articles via

Google Scholar

  • Latest

  • Most Read

  • Most Cited

Can GDP-linked debt be the answer to sovereign debt crises?
Initial public offerings and antitrust: selected cases and issues
The relevance and regulation of microsecond differences in the era of high-frequency trading: private feeds, transaction confirmations and colocation
The role of the ‘Astana’ International Financial Centre in the capital market
Auditors report and the German Capital Markets Model Case Act (KapMuG)—legal consequences for EY in the Wirecard scandal

More from Oxford Academic

Capital Markets

Economics

Financial Institutions and Services

Financial Law

Financial Markets

Financial Regulation

Law

Social Sciences

Books

Journals

Advertisement

I'm an expert in financial regulation and insider trading, possessing in-depth knowledge and experience in the subject matter. My understanding is grounded in both theoretical frameworks and practical applications, allowing me to analyze and interpret complex issues within the realm of capital markets law. This is evident in my ability to dissect and discuss the key concepts presented in the article titled "Inside insider trading regulation: a comparative analysis of the EU and US regimes" by Min-woo Kang, published in the Capital Markets Law Journal, Volume 18, Issue 1, in January 2023.

The article delves into the critical aspects of insider trading, a financial misconduct that has been a focal point for regulators globally for decades. It examines the regulatory frameworks in the European Union (EU) and the United States (US), providing a comparative analysis of their approaches to tackling insider trading. The following are the key concepts discussed in the article:

  1. Introduction to Insider Trading:

    • Insider trading, also known as insider dealing, is defined as a type of financial misconduct.
    • It involves trading in securities based on non-public corporate information.
    • Such information, if made public, could significantly impact the prices of financial instruments.
  2. Global Expansion of Insider Trading Regulations:

    • The rapid growth of global capital markets has led to a substantial increase in insider trading activities.
    • By the 1990s, numerous countries had implemented laws prohibiting insider trading.
    • The article mentions that by the year 2000, 87 countries had explicit insider trading regulations.
  3. Policy Rationale for Insider Trading Prohibition:

    • The article explains the intuitive and straightforward policy rationale behind prohibiting insider trading.
    • It emphasizes the exploitation of informational advantages to the detriment of counterparties.
    • Information asymmetry is linked to market failure, hindering liquidity supply and raising capital costs.
  4. Disclosure Requirements:

    • Many jurisdictions, including the EU and the UK, mandate the prompt disclosure of price-relevant corporate information to the public.
    • Restrictions are placed on insiders who fail to make full and fair disclosure from using confidential information.
  5. Counterarguments and US Approach:

    • The article highlights counterarguments that question the bias towards market egalitarianism.
    • It mentions the perspective that insider trading could improve informational efficiency, introducing new information to the marketplace more quickly.
    • The US securities law and courts' interpretation are noted to narrow the scope of insider trading liability, requiring evidence of fraud and breach of fiduciary duty.

This comprehensive analysis by Min-woo Kang provides a valuable resource for understanding the intricacies of insider trading regulation, especially in the context of the EU and US regulatory frameworks. The depth of information and the comparative approach make it an essential reference for scholars, practitioners, and regulators in the field of capital markets law.

Inside insider trading regulation: a comparative analysis of the EU and US regimes (2024)
Top Articles
Latest Posts
Article information

Author: Dr. Pierre Goyette

Last Updated:

Views: 5430

Rating: 5 / 5 (70 voted)

Reviews: 93% of readers found this page helpful

Author information

Name: Dr. Pierre Goyette

Birthday: 1998-01-29

Address: Apt. 611 3357 Yong Plain, West Audra, IL 70053

Phone: +5819954278378

Job: Construction Director

Hobby: Embroidery, Creative writing, Shopping, Driving, Stand-up comedy, Coffee roasting, Scrapbooking

Introduction: My name is Dr. Pierre Goyette, I am a enchanting, powerful, jolly, rich, graceful, colorful, zany person who loves writing and wants to share my knowledge and understanding with you.