WHAT IS INSIDER TRADING?
A recent study revealed that American authorities prosecute twenty times more insider trading violations than their Canadian counterparts. Toronto Star journalist Tylor Hamilton reported that, outside our borders, international investors “consider Canada as an “enforcement-free zone” where people don’t just get away with white-collar crime but also profit dearly from it”.
Trading on the basis of inside information is illegal in Canada and the United States and in many other jurisdictions around the world, as it allows investors to gain an unfair advantage and swindle others by buying or selling stocks using non-public information that affects share prices when released. The economic benefit that one can achieve from insider trading is extensive. For example, John Felderhof, the former Bre-X Minerals chief geologist, was accused of using insider trading to gather an additional 83.9 million dollars of profit. While insider trading may appear to be a victimless crime, studies have shown that it has an enduring impact on economic growth as well as the public’s confidence in the integrity of the markets.