Conflict of Interest in Nigeria Security Market

This document discusses the conflict of interest associated with the Nigeria Security Market, including insider trading. It explores the laws designed to prevent insider trading, examples of organizational policies used to discourage it, and ways managers can use the policies and laws to discourage conflict of interest. The document also suggests ways to improve the laws and policies to motivate employees to avoid conflict of interest.

Bus 5115: Business Law, Ethics and Social Responsibility
Written Assignment Unit 1
Topic: Introduction to Ethics in Business
Instructor: Dr. Patrick Udeh
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Organization Picked: Nigeria Security Market
Introduction
A conflict of interest is when members of the organization or the organization itself have two or
more interest that compete with that of the organization or with the environment in which it
operates.
Issues to be Discussed
1. Conflict of interest associated with the organization
2. The law designed to prevent the conflict of interest
3. Examples of organizational policies used to discourage conflict of interest
4. Ways managers can use the policies and laws to discourage conflict of interest
5. Ways the laws and policies could be improved
The Conflict of Interest Associated with the Organization
The conflict of interest associated with the organization is self-dealing (Insider Trading).
Self dealing which is the same as insider trading in the security market, is when an official, most
especially at a higher hierarchy, act based on their personal interest at the expense of the
organization (Indeed, 2022). Self dealing, which is insider trading in the securities market is
when someone acts based on their own selfish interest, their major concern is what becomes
profitable to them.
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The Law Designed to Protect Insider Trading Conflict of Interest
The law designed to prevent the insider trading conflict of interest is Section 115 ISA which
states that individuals that engage in insider trading is liable to a sum nothing less than #500,000
or the double of the profit derived or to be imprisoned below 7 years but for a corporate body,
they will be liable to pay an amount not less than #1,000,000 or double of the profit derived
(Ochei & Ukuegbu, 2022). This means the corporate body pay more than what the individuals
are liable to pay and they are also liable to pay a double of the gain that arises from the
transactions.
Examples of Organizational Policy Used to Discourage Insider Trading Conflict of Interest
An example of policies used to discourage insider trading conflict of interest is Mobil security
trading policy which prohibits everyone, most especially people in managerial role from
involving In the sales and purchases of the security during a prohibited period as indicated by the
company and all transactions pertaining to the shares of the company which occurred should be
reported and record should be taken (11PLC, 2021). This policy was developed to eradicate
insider trading and so as to know what is right to do and what is wrong to do, it states that it is
very wrong to engage in trading of company security when it is not indicated to do so.
The main feature of this policy is that it serves as a guide to avoid insider trading because every
employee will be aware that their should be transparency and proper records of all dealings and
also insider trading should be avoided as much as possible.
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Ways Managers Can Use the Policy and Laws to Discourage the Conflict of Interest
Managers should do background checks on all staff, avoid disclosing confidential information in
social gatherings, they should define clearly sensitive and non- sensitive information (Callister,
2022). Managers should do a check on every staff so as to ensure the wrong candidates are not
employed, their should also be an emphasis on all staff concerning the sensitive and non-
sensitive information disclosure to the public, it should be specified that information should not
leak to outsiders, most especially during social gatherings and also managers should monitor the
trading trends.
Yes, laws and policies help promote ethical behavior and they are sufficient and effective.
Conclusion and Recommendation on Ways Laws and Policies could be Improved to
Motivate Employees to Avoid Conflict of Interest
Having discussed the self dealing or insider trading and the laws and policies attached, the way
forward on how these laws and policies can be improved is regular review of the laws and
policies so as to make it updated at regular intervals and also, these laws and policies should be
well communicated to all parties involved.
In conclusion, insider trading is not good and should not be encouraged in all organizations, it
should be prohibited at all intervals and proper avoidance should be made.
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References
11PLC. (2021). Security Trading Policy. Retrieved from https://11plc.com/security-trading-
policy/
Callister, L. (2022, March 23). 10 Ways to Prevent Insider Trading. Retrieved from
https://www.skillcast.com/blog/prevent-insider-trading-tips
Indeed (2022). Conflict of Interest: Definition, Examples and Tips. Retrieved from
https://www.indeed.com/career-advice/career-development/conflict-of-interest
Ochei, A., & Ukuegbu, O., (2022, April 19). Why is Insider Trading a crime?. Retrieved from
https://businessday.ng/news/article/explainer-why-is-insider-trading-a-crime/
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