NCJ Number
147155
Date Published
1993
Length
42 pages
Annotation
Insider trading is discussed.
Abstract
Regulation and the push to innovate in the securities industry have created new information demands and changing webs of entitlement and obligation that place many different roles and relationsips at risk of abuse and corruption. Transactions are pushed to the limits of norms of practice by combinations of information-driven commodities; complicated networks of transaction-oriented exchanges with conflicts of interest; and organizational cultures, including legal and moral ambiguity about insider trading rules. Social controls, where they exist, are not well- suited for managing the dynamics of the market. The author analyzes the securities industry and its structural and cultural vulnerabilities to the unlawful use of inside information by traders and securities organizations. Divided into six sections, the essay contains discussions on insider trading and its organizational bases, typical violations and violators, the organizational context of insider trading, a model of market vulnerability, and the governmental response to insider trading, relating the response to the interorganizational dimensions of contemporary insider trading activity. The author concludes that changing demographics in the market as well as organizational adaptations to the changing informational needs of the market have created new avenues and incentives for abuse. Dynamic models of organizational crime need to be built that recognize organizational capabilities to adapt to regulatory environments and to shape the regulatory apparatus that governs their behavior. References