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NCJRS Abstract

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NCJ Number: 134307 Find in a Library
Title: Insider Trading and Securities Fraud Enforcement Act of 1988 and Controlling Person Liability: Can Firms Outside the Securities Industry Risk Not to Adopt Insider Trading Safeguard?
Journal: University of Detroit Law Review  Volume:67  Issue:2  Dated:(Winter 1990)  Pages:261-307
Author(s): P M Donnelly
Date Published: 1990
Page Count: 46
Type: Legislation/Policy Analysis
Format: Article
Language: English
Country: United States of America
Annotation: The prohibition of insider training in the 1988 Act is examined in reference to companies outside the securities firm context.
Abstract: Section 3 of the Insider Training and Securities Fraud Enforcement Act of 1988 provides the Securities Exchange Commission (SEC) with authority to impose civil penalties on controlling persons in the securities industries, particularly brokers, dealers, or investments advisers, regarding insider training. However, the 1988 Act does not clearly apply this standard to law firms, accounting firms, corporations, and other companies which acquire inside information while performing services. In order to examine this application, the basic principles behind the ban on insider training are outlined with a presentation of the arguments pro and con as well as the development of insider trading laws. Section 3 of the 1988 Act is presented together with section 25(f) of the 1934 Act and section 204 A of the 1940 Investment Advisor Act as a possible indication of the extension of the 1988 Act to entities outside the industry. Until the question of application to firms outside securities is resolved, the more immediate issue concerns the liability controlling persons outside the securities industry face without designated procedures to prevent insider trading.
Main Term(s): Insider trading
Index Term(s): Commercial fraud; Securities fraud; White collar crime
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