Common law

Other common law governing insider trading are the Insider Trading Sanctions Act of 1984 and the Insider Trading and Securities Fraud Enforcement Act of 1988 (Miller & Jentz, 2009). These two acts are instrumental in mitigating illegal insider trading activities in the stock exchange market. The laws impose penalties of up to three times any profits gained through illegal insider trading.

Another ethical issue of concern in insider trading is the question of unfair competition (Brenkert & Beauchamp, 2009). Insider trading involves individuals taking advantage of non-public information of a company to execute stock trading practices. According to its definition, the practice does not only involve corporation officials, employees, and large stakeholders but even third party members with access of such information. This has the implication that other investors with stocks on the corporation suffer the disadvantage of transacting their stocks and bonds long after insiders have made them.