Insider Trading Controversies: A Literature Review

Posted: 25 Nov 2014

Multiple version iconThere are 2 versions of this paper

Date Written: December 2014


Using the artifice of a hypothetical trial, this article presents the cases for and against insider trading. Both sides in the trial produce as evidence the salient points made in more than 100 years of literature on insider trading. The initial days of the trial focus on the issues raised in the law literature such as fiduciary responsibility, the misappropriation theory, and the fairness and integrity of markets; however, the trial soon transfers focus to issues such as Pareto optimality, efficient contracting, market efficiency, and predictability raised in the financial economics literature. Open issues are then brought up. A jury finally hands down its verdict.

Suggested Citation

Bhattacharya, Utpal, Insider Trading Controversies: A Literature Review (December 2014). Annual Review of Financial Economics, Vol. 6, pp. 385-403, 2014, Available at SSRN: or

Utpal Bhattacharya (Contact Author)

HKUST Business School ( email )

Clear Water Bay
Hong Kong

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