One of the most common questions I hear about insider trading is, “how do they get caught?” The New York Times answered that question for us today, in this article about the new enforcement efforts at the SEC. The article focuses on our favorite insider trader, Garrett Bauer. For those readers that are new students, Garrett was a guest speaker for my ethics class last semester. He faces a long sentence, about ten years in federal prison, and was caught as a result of the SEC’s new investigation tools after getting away with insider trading for seventeen years.
What do you think about the SEC’s new focus on insider trading? Should the agency be focusing on bigger problems?
One Comment
David Han posted on May 30, 2012 at 3:44 pm
As a young business student that is developing early insights into the world of finance, I clearly see the issues that insider trading poses. I do believe that insider trading is an issue that needs to be constantly addressed, as I’m sure traders will work tirelessly to find new methods of providing information in more discrete ways.
However, a question that comes to mind are simply, ethical dilemmas that I can see being relevant. With a down economy and the lack of low-risk ventures for a lone investor, I don’t know if prison sentences are that appropriate for people caught with insider trading. I’d imagine a healthy proportion of investors being family oriented men looking to provide for their families – would it be too small of a penalty to simply charge hefty fees for insider trading?
If the SEC continues to track down traders, where is the line drawn? At some point, could they start finding any excuses for investors throwing money at high-risk ventures?