Identifying the Impact of Insider Trading on Global Investors

This report investigates the impact of insider trading on global investors, addressing the associated problems and regulatory laws designed to mitigate them. The study begins by defining insider trading and identifying global investors, then explores the financial losses and investment risks they face. It examines regulatory frameworks, such as the Criminal Justice Act 1993 and the Financial Services and Markets Act 2000, that aim to protect investor interests. The research also includes a literature review and a Gantt chart to illustrate the research methodology and project timeline. The report concludes by emphasizing the importance of investor protection and the need for regulatory oversight in ensuring fair and transparent stock market practices. The study aims to provide insights into how insider trading affects international investment and how regulatory measures can help safeguard investor capital.

Investor Protection

Table of Contents
TITLE .............................................................................................................................................1
INTRODUCTION ..........................................................................................................................1
Research Question...........................................................................................................................1
LITERATURE REVIEW ...............................................................................................................2
Insider trading and who are global investors..............................................................................2
Problems that global investors face due to insider trading.........................................................2
Regulatory laws to overcome the problem of insider trading for global investor......................3
Regulatory laws assist to prevent the problem of insider trading while investing in stock
market..........................................................................................................................................3
SIGNIFICANCE OF STUDY.........................................................................................................3
SCOPE OF STUDY ........................................................................................................................4
OBJECTIVE OF STUDY................................................................................................................4
RESEARCH METHODOLOGY ....................................................................................................4
GANTT CHART ............................................................................................................................6
CONCLUSION ...............................................................................................................................8
REFERENCE...................................................................................................................................9

TITLE
“To identify the impact of insider trading on global investor”.
INTRODUCTION
Overview of the project
Insider trading is explained as the trading of securities by corporate insiders such as
manager or even executives. Insider trading can be either legal or illegal but it is totally
dependent upon the situation that for what purpose news has been disclosed by the important
member of an organisation (Klöhn, Hornuf and Schilling, 2016). The person who are engaged in
illegal insider trading attempt to benefit from the information which they are aware about but still
not published for public. In present scenario, there are number of insider trading activities found
which affect the global investor. It is one of the issues which is increasing at a greater speed due
to which percentage of global investor are decreasing at a rapid speed. Every year number of
investor invest there capital in international market increase diversification and spread investment
risk among foreign markets and organisation.
Research aim: “To identify the issues of insider trading for global investor”.
RESESRCH PROBLEM
The main problem in current scenario is for Global investors where they face investment
issues due to Insider trading.
Research Question
Some of the important question for conducting this research are
 What is insider trading and who are global investors?
 What are the main problems that global investors face due to insider trading?
 What are the regulatory laws to overcome the problem of insider trading so that interest of
global investors can be protected?
 How are the regulatory laws assist to prevent the problem of insider trading in order to
protect interest of investor while investing their capital within stock market?
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LITERATURE REVIEW
Insider trading and who are global investors
According to “Joshua Kennon”, 2019, insider trading can be explained as the concept in
where any of the person conducts any of stock activity which is based on those information
which are still not disclosed within the market. In most of the situation, information related to
insider trading are illegal and creates problem for general investor of the company as it gives
opportunity to create profit in some of the cases where as in some of the situation it helps to avoid
losses. The punishment which people have to face just because of insider trading is either
monetary penalty or jail or even both. Insider trading can take place only in the situation where
any of the important person of the organisation shares information with other people.
As per the view of “Fotak, Lee and Megginson, 2019”, global investor are the people who
likes invest their capital into different organisation working in different part of the world. There
choice of preference for investing is always based on the situation of a company that how well it
is performing at the moment. In every country investor are being given certain limit in which they
can invest capital into other country as well. Also, the main things which global investor focuses
the most before investing into another country is that how well national and international security
market is performing.
Problems that global investors face due to insider trading.
According to “Athari, Adaoglu and Bektas, 2016”, global investors are increasing day by
day and the main reason behind this is insider trading due to which they have to suffer from
losses. Insider trading is one of the reason which is forcing global investor not to invest the
capital in international market. They have to suffer from financial losses and even they does get
the idea that when they are required invest and at what time they should sell out their shares for
earning profit. Whenever this types of situation arises, then investor self confidences
automatically decreases due to company have to also suffer. Here, company will not get
opportunity to expand their business at global level which means they will have limited sources
of earning the money. Also, global investor will not be able to invest their capital at international
where there personal profit will also decrease automatically.
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Regulatory laws to overcome the problem of insider trading for global investor.
As per the view of “Law and Mills, 2019”, insider trading is one of the illegal activity
which directly affect the interest of investor. There are number of laws and regulations which has
been commenced for protecting the rights of investor. In context of UK, London Stock Exchange
has the responsibilities to protect the right of investor which they closely monitor each and every
activity within stock market. Some of the other laws which helps to overcome the problem of
insider trading for investor is Criminal Justice Act 1993, financial Service and Markets Act 2000,
European Union Regulations are some of the important laws which help to overcome the problem
of insider trading. If in any of the situation investor faces the problem related to insider trading
then they are required to file the case as per the guidelines of above mentioned law which can
help them out to sort out the particular problem. Every country have different rules and
regulations for security market and it is necessary for global investor to take the help from the
department of security market whenever any fraud takes place against them.
Regulatory laws assist to prevent the problem of insider trading while investing in stock market.
According to “Persakis and Iatridis, 2016”, global investor are increasing day by day
where they wants to invest their capital within different market so that they can get opportunity to
earn healthy amount of profit. Regulator law has the important work to protect the right of
investor whenever they invest their assets in security market. It will be the responsibilities of
regulator law to try and find those organisation which are not working as per the terms and
condition of stock market and after that they can publish the news which will directly investor to
find that whether they should invest in that particular organisation not. Also, regulator laws will
try to eliminate those company from stock market where cases related to insider trading occurs
again and again. Also, it will try to sort out those cases of insider trading where there is no default
of global investor so that their money can be protected.
SIGNIFICANCE OF STUDY
In is necessary to conduct research because it helps to collect all of the relevant
information which helps investor to take there decision before investing within the security
market. It is one of the report which will explain that what is insider trading and how it can create
negative impact for company as well as global investor. It is one of those research which explains
that what are the reason that investor wants to invest there capital in international market. This
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study will contribute that regulator is each and every steps so that investor can easily invest their
capital without taking any of the burden on them.
SCOPE OF STUDY
It is one of the study which is very important in current scenario as it will tell that how
insider trading can affect any of the stock market. This study will help global investor to decided
and take their decision that how global investor can save themselves for the problem of insider
trading(Giofré, 2017). It will also help to develop the security market where investor will
understand in detail about each and every things related company where they are going to invest
there fund. It will also help company to decided that who should be involved in any of the
decision making process so that sensitive information cannot be shared to any of those person
who thinks about personal benefit.
OBJECTIVE OF STUDY
 To identify concept of insider trading and who are global investor.
 To find out main problems that global investors face due to insider trading.
 To analyse regulatory laws to overcome the problem of insider trading so that interest of
global investors can be protected?
 To determine importance of regulatory laws to prevent the problem of insider trading in
order to protect interest of investor while investing their capital within stock market.
RESEARCH METHODOLOGY
Research methodology is simply explained as the complete procedure which is required
to be considered at the of conducting research. It is helpful researcher because it allows them to
collect all of the relevant information which are required while managing the research. It is said,
research methodology helps researcher to address all of the questions which are required to be
addressed at time of conducting research.
Research design: It is understood as the key tool of methods and techniques which is
needed to be chosen by researcher for conducting research on specific topic so that all of the
problem which arises can be sorted out in logical manner(Fotak, Lee and Megginson, 2019). It is
helpful for the researcher at the time when they conduct research because it will allow them to
analyse about the information which they have collected and according to that they can easily
take their decision. There are three types of research design and they are descriptive,
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experimental, exploratory. Here, descriptive design will be much suitable as it allow to collect all
of the relevant information about the topic.
Source of Data: The source of collecting data are of two types and they are primary
source and secondary source. In case of primary source, researcher will have to collect all of the
information directly by asking questions and even conducting interview. While talking about
secondary data, information are collected by talking the help of published news, articles and
different relatable journals. Both of this data collecting way will help them to gather relevant
information related to research.
Data Collection Technique: In any of the research, collecting data plays the most crucial
role as it tells that any of the research can be conducted (Law and Mills, 2019). It is of two types
primary and secondary. In primary data are collected directly fresh and new but in case of
secondary it is taken by the help of other others and journals, articles magazines. In this particular
research, all of the data which have been collected are from secondary resources.
Data Analysis Technique: Here, three different types are there and they are deductive,
inductive and regression. Each and every of this has its own importance but it is the
responsibilities of researcher that they can take the help of only one source and here researcher
have taken the help of inductive research technique. As it will help them to investigate each and
every topics in detail.
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GANTT CHART
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A Gantt chart is a type of bar chart that illustrates a project schedule. This chart lists the
tasks to be performed on the vertical axis, and time intervals on the horizontal axis. The width of
the horizontal bars in the graph shows the duration of each activity. It is helpful for each and
every research as it guides them that what and when they are required to do any of the work.
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CONCLUSION
From the above file, it can be easily concluded that insider trading is one of the fraudulent
activity which directly impacts upon those investor who does trading within stock market.
Activities like insider trading doesn't allow global investor to invest on the organisation through
due to which company reduces their opportunities to raise capital from market.
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REFERENCE
Books & Journals
Athari, S. A., Adaoglu, C. and Bektas, E., 2016. Investor protection and dividend policy: The
case of Islamic and conventional banks. Emerging Markets Review. 27. pp.100-117.
Fotak, V., Lee, H. and Megginson, W., 2019. A BIT of investor protection: How Bilateral
Investment Treaties impact the terms of syndicated loans. Journal of Banking &
Finance. 102. pp.138-155.
Giofré, M., 2017. Financial education, investor protection and international portfolio
diversification. Journal of International Money and Finance. 71. pp.111-139.
Klöhn, L., Hornuf, L. and Schilling, T., 2016. The regulation of crowdfunding in the German
small investor protection act: content, consequences, critique, suggestions. European
Company Law.13(2). pp.56-66.
Law, K. K. and Mills, L. F., 2019. Financial gatekeepers and investor protection: Evidence from
criminal background checks. Journal of Accounting Research. 57(2). pp.491-543.
Persakis, A. and Iatridis, G. E., 2016. Audit quality, investor protection and earnings
management during the financial crisis of 2008: An international perspective. Journal of
International Financial Markets, Institutions and Money. 41. pp.73-101.
Online
What Is Insider Trading and Why Is It Illegal. 2019. [Online]. Available Through:
<https://www.thebalance.com/what-is-insider-trading-and-why-is-it-illegal-356337>
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