Boesky's Criminal Involvement With Insider example essay topic

Insider trading has been a commonly discussed topic since Martha Stewart was accused, tried, convicted, and served a prison term for her involvement with the Incl on trading scandal. However, the definition of the term "insider trading" is not necessarily always connected with illegal activity. As a matter of fact, in some jurisdictions, "insider trading is no crime. Traditionally, it has been an expected, and perfectly acceptable prerequisite of certain sorts of employment". (Insider Trading). But since the latter part of the 1960's, stricter enforcement of insider trading practices have been put into place because of financial scandals.

First to be discussed is a concrete definition of "insider trading" as it is discussed in this essay. According to the "European Communities 1989 Insider Dealing Directive: insider trading is the dealing on the basis of materials unpublished, price-sensitive information possessed as a result of one's employment. (Insider Trading) " Ivan Boesky pleaded guilty to the biggest insider-trading scheme discovered by the United States Securities and Exchange Commission (SEC). He made 200 million dollars by profiting from stock-price volatility on corporate mergers. What he actually did was cheat by using illegally obtained secret information about impending mergers to buy and sell stock before mergers became public knowledge / Although insider trading is nothing new, the SEC knows it has become a threat to the public's confidence, and they must enforce regulations to stop criminal activity. The SEC has put pressure on managers to regulate information leaks, promising strict legal enforcement if a business fails to police misuse of privileged employee information.

In his plea bargaining, Ivan Boesky agreed to pay one-hundred million dollars in fines and to fully cooperate with the SEC members in other investigations of insider trading cases. His cooperation has also led to major charges against Kidder Peabody, Martin Siegel, and other financiers. Without Boeskey's help, catching other insider-trading criminals would have been almost impossible. Ivan Boesky even wrote a book about his involvement in the world of insider trading; he called it Merger Mania. This case illustrated that there were real consequences to white collar crime. In addition to paying the fifty million dollar fine, he relinquished another fifty million dollars of his illegal trading profits.

(He still had millions remaining, however, from his illegal gains.) His actual prison sentence was three years, yet he served only twenty-two months in the federal prison at Lompoc, California, which was known to have a "country-club" atmosphere. Another four months was served at a Brooklyn halfway house. Probably the most significant result of the entire Boesky case was that Wall Street fraud was taken much more seriously. Congress passed much stricter laws and the SEC was empowered with more authority to punish lawbreakers, forcing those who were found guilty of insider trading to pay fines that amounted to three times the amount of their profits. All together, more than forty enforcement actions resulted from Boesky's cooperation with the SEC". The biggest downfall resulting from Boesky's cooperation", cited Barry Goldsmith, an ex-SEC lawyer handling the civil case against Boesky, "was Michael Milken, the former Drexel junk bond trade who pleaded guilt to six felony securities violations, paid more the one billion dollars in fines and restitution and served two years in prison (Augusta Chronicle Online.

). ' When comparing to Boesky's criminal involvement with insider trading to that of Martha Stewart, it is almost laughable. Although she was first charged with insider trading, her conviction was based on her lying under oath. Her profits from the alleged incident involved only a few thousand dollars and no one else suffered monetary loss; therefore, one might assume that the SEC's overzealous pursuit of the letter of the law in her case may have been politically motivated..