Insider Trading is a dreaded problem in the corporate world and it has become rampant in the Nigerian market. The fine for insider trading in America can be a fine of up to $5 million and also 20 years of imprisonment.
It is therefore not surprising that the financial sector had to go through the process of mergers and acquisition mandated by the Central Bank of Nigeria as one of the corrective measures.
Insider trading has been regarded as part of the benefits of being an executive to have an advantage over other investors through information obtained from either being an insider or from other insiders which may inevitably influence any financial decision made.
America was the first country to commence the prohibition of insider trading, before other countries followed suit.
Insider trading was not made an offence under Nigerian law until 1990 following the recommendation of the Nigerian Law Reform Commission.
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For example, A high-level employee overhears some conversation about a merger and understands its market impact and consequently buys the shares of the company in his father’s account.
Real life examples of Insider Traders
- Martha Stewart
- Reliance Industries
- Joseph Nacchio
- Yoshiaki Murakami
- Raj Rajaratnam
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