Insider Trading and the Integrity of Mandatory Disclosure

2018 Wisconsin Law Review 1133 (2018)

UCLA School of Law, Law-Econ Research Paper No. 18-12

60 Pages Posted: 3 Oct 2018 Last revised: 3 Feb 2019

See all articles by James J. Park

James J. Park

University of California, Los Angeles (UCLA) - School of Law

Date Written: December 11, 2018

Abstract

Insider trading regulation has been primarily shaped by two theories. The first argues that unequal access to material information corrupts the integrity of securities markets. The second contends that insider trading primarily undermines the property rights of a corporation. The dominance of the market integrity and property frameworks has obscured an important reason to regulate insider trading – it can undermine the integrity of the disclosure mandated by the securities laws. Such disclosure is meant to benefit all investors and should not be exploited by a few. Insider trading is particularly problematic in a periodic disclosure system where the release of significant information is deliberately delayed so it can be analyzed and verified. This Article argues that protecting the integrity of mandatory disclosure is a compelling reason for insider trading regulation. This disclosure approach suggests clearer limits to the reach of insider trading law and enforcement than the market integrity and property theories.

Keywords: insider trading, securities regulation, securities disclosure

Suggested Citation

Park, James J., Insider Trading and the Integrity of Mandatory Disclosure (December 11, 2018). 2018 Wisconsin Law Review 1133 (2018), UCLA School of Law, Law-Econ Research Paper No. 18-12, Available at SSRN: https://ssrn.com/abstract=3258608

James J. Park (Contact Author)

University of California, Los Angeles (UCLA) - School of Law ( email )

385 Charles E. Young Dr. East
Room 1242
Los Angeles, CA 90095-1476
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
412
Abstract Views
1,601
rank
85,584
PlumX Metrics