NCJ Number
196343
Journal
Journal of Criminal Justice Volume: 30 Issue: 4 Dated: July/August 2002 Pages: 273-286
Editor(s)
Kent B. Joscelyn
Date Published
July 2002
Length
14 pages
Annotation
The characteristics and details of routine insider trading of 452 persons charged by the Federal Government with profiting or avoiding losses by means of insider trading, are explored in this article.
Abstract
Persons who possess non-public information and trade in the securities market on the basis of that information are defined as committing an illegal act, that of insider trading. This study provides numerical portraits of various aspects of insider trading and addresses theoretical concerns, examining the self-control theory, "A general theory of crime," by Gottfredson and Hirschi. This theory states that people with low self-control are risk-seeking, shortsighted, insensitive to others, and desire immediate gratification. The data used were obtained from civil charges filed by the Securities and Exchange Commission (SEC) and criminal cases brought by the U.S. Department of Justice, from 1980 to 1989, and contained information on the occupation of the accused, tipping, recidivism, illegal gain, type of information used in the trade, and sentence. Results of the study indicated counterintuitive results regarding the typical insider trade and insider traders. A comparison was made between defendants charged civilly and those charged criminally, and the sentences that were imposed were examined. Tables include descriptive characteristics of insider trading defendants charged civilly; comparison of insider trading defendants charged civilly and criminally; logistic regression model of the probability of being criminally charged with insider trading; and sentencing of insider traders charged civilly. It is recommended that future study intended to influence criminal theory focus on the lower ranges of information not previously addressed, such as learning from offenders how they understood what they were doing, what they hoped to accomplish, and what their chances were for detection. References