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Optimal Insider Strategy with Law Penalties

20 Pages Posted: 2 Dec 2012  

José Fajardo

Getulio Vargas Foundation

Date Written: December 1, 2012

Abstract

We study the optimal continuous trading strategy of an insider who is subject to the possibility of law penalties due to her illegal trading activity. This possibility was absent in previous works. Also, we discuss how to obtain the optimal penalty rule that maximize a welfare function.

Keywords: Insider trading, Law Penalties, Social Welfare

JEL Classification: G11, K42

Suggested Citation

Fajardo, José, Optimal Insider Strategy with Law Penalties (December 1, 2012). Available at SSRN: https://ssrn.com/abstract=2183658 or http://dx.doi.org/10.2139/ssrn.2183658

José Fajardo (Contact Author)

Getulio Vargas Foundation ( email )

Brazil
55213799 5781 (Phone)

HOME PAGE: http://www.josefajardo.com

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