Stock and Option Markets: Are Insider Trading Regulations Effective? Export

@article{citeulike:3339145, abstract = {The link between traded options and the enforcement practices of the Securities \& Exchange Commission (SEC) against insider trading is examined. First, the regulations currently in place and how they are being enforced are discussed. Three strategies employing joint stock and option positions can be used by insiders to capture gains similar to those available on pure stock transactions. The first allows the insider to lock in an unrealized stock gain by writing an in-the-money call option on that stock. The 2nd strategy involves writing an in-the-money put prior to the release of important information and subsequently writing an in-the-money-covered call. The final strategy enables the insider to profit from negative inside information through simulating a short sale. The pure stock transactions violate the SEC regulations. However, it is argued that the combined strategies, which violate the spirit but perhaps not the letter of the law, will go undetected under current checks.}, author = {Cleeton and David, L. and Reeder and Paul, A.}, citeulike-article-id = {3339145}, journal = {The Quarterly review of economics and business}, keywords = {effectiveness, insider-trading, markets, options, regulations, securities, studies}, number = {1}, pages = {63--77}, posted-at = {2008-09-26 08:20:36}, priority = {2}, title = {Stock and Option Markets: Are Insider Trading Regulations Effective?}, volume = {27}, year = {1987} }

TY - JOUR ID - citeulike:3339145 L3 - citeulike-article-id:3339145 N2 - The link between traded options and the enforcement practices of the Securities & Exchange Commission (SEC) against insider trading is examined. First, the regulations currently in place and how they are being enforced are discussed. Three strategies employing joint stock and option positions can be used by insiders to capture gains similar to those available on pure stock transactions. The first allows the insider to lock in an unrealized stock gain by writing an in-the-money call option on that stock. The 2nd strategy involves writing an in-the-money put prior to the release of important information and subsequently writing an in-the-money-covered call. The final strategy enables the insider to profit from negative inside information through simulating a short sale. The pure stock transactions violate the SEC regulations. However, it is argued that the combined strategies, which violate the spirit but perhaps not the letter of the law, will go undetected under current checks. IS - 1 JF - The Quarterly review of economics and business EP - 77 TI - Stock and Option Markets: Are Insider Trading Regulations Effective? VL - 27 SP - 63 KW - effectiveness KW - insider-trading KW - markets KW - options KW - regulations KW - securities KW - studies AU - Cleeton AU - David, L AU - Reeder AU - Paul, A PY - 1987/// ER -