training presentation on shareholder crimes
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In this PPT you will get the answer of the following assignments:
You are the new training manager for a large corporation that offers employees the opportunity to purchase company stock directly through their paychecks. Using the following scenario and other recent real-life examples, develop a training session for the employees of the company. The goal of the training session is to accomplish the following:
Shareholder crimes
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Identify the crime.
Explain what federal agency would prosecute the crime.
What punishment(s) could be enforced?
Provide other real-life examples of people who have committed this crime.
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SCENARIOJack and Diane are married and both executives
at Electro-Source, a large multinational electronics company. The couple holds substantial Electro-Source company stock and the majority of their retirement funds depend on company stock performance.
Jack is a director within the marketing division and Diane is a vice president in charge of all North American sales. One Friday, Jack advises Diane that the company lost a large government contract for new electronic components.
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The contract was worth over US $1 billion in sales and the loss could signal large layoffs. Government officials have not publicly announced their contract decision; however, they have advised (privately and confidentially) several non-winning bidders, including executives at Electro-Source.
Jack and Diane decide to immediately sell the majority of their company stock to protect their retirement savings.
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. The market on that Friday was favorable toward Electro-Source stock as earlier reports indicated that Electro-Sources was a finalist for the contract; however, as stated, a final decision was not yet public.
Jack and Diane sell their stock to unsuspecting investors through their personal broker
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Running Head: INSIDER TRADING
Training on Insider Trading
Insider Trading 1
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Introduction
Case Overview
Crime: Insider Trading
Federal Agency: Security and Exchange Commission
Insider Trading 1
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Insider Trading
What is Insider Trading
Impact of insider trading
Insider Trading 1
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Identify the Crime
Involvement of Internal Person of Organization
Internal Information
Information use for self- interest
Insider Trading 3
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(U.S. Securities and Exchange Commission, 2010)
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US Regulation of Insider Trading
Section 16 of the 1934 Securities Exchange Act
Section Rule 10b-5
Section Rule 14-e3
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Section 16 of the Securities Exchange Act 1934
Section 16 (a) : Disclosure Provision
Section 16 (b) : Recovery of Short Swing Profits
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Section Rule 10b-5
Aspect of the Rule
Elements of the offense
Protective aspect from insider trading
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Section Rule 14e-3Prohibits the insider trading during the tender
offers
Establishes a “ disclose or abstain from trading”
Is not premised on breach of a fiduciary duty
Section Rule 14e-3(a)
Section Rule 14e-3(d)
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Punishment for the Insider Trading The punishment for the insider trading are:
Penalties
Imprisonment
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Example of The Insider Trading Martha Stewart’s Insider Trading Case (Haffmen
& Drew, 2007)
Perot Systems Insider Trading Case (U.S. Securities and Exchange Commission, 2010).
Two French Citizens Insider Trading Case (U.S. Securities and Exchange Commission, 2010).
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References Kennon, J. (2010). Understanding Insider
Trading. Retrieved March 2, 2010. From http://beginnersinvest.about.com/cs/newinvestors/a/102702a.htm
Bartos, J.M, (2006).United States securities law: a practical guide (3rd ed.). Kluwer Law International.
Jhonson, P.M. & Hazen, T.H. (2004). Derivatives regulation. Aspen Publishers Online.
Steinberg, M.I, (1984). Securities regulation: liabilities and remedies. Law Journal Press.
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ReferencesHaffmen & Drew. (2007). Martha Stewart's
Insider Trading Case: A Practical Application of Rule 2.1. Retrieved March 2, 2010. From http://www.allbusiness.com/legal/banking-law-banking-finance-regulation/8908385-1.html
U.S. Securities and Exchange Commission, (2010). Retrieved March 2, 2010. From http://www.sec.gov/news/press/2009/2009-275.htm
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