Prohibition Of Trade Research Articles

An Economic Analysis of Trading on Private Information By External Administrators: International Comparisons

This paper examines the regulation of trades in listed securities by external administrators (EAs), such as trustees in bankruptcy, liquidators, receivers, and administrators on the basis of private information. We consider the economic policy issues associated with such trades. The principal considerations counsel in favour of taking a permissive approach. These are: the difficulties of associating trades with insider information, given the EA's necessarily short expected holding period, the asymmetric application of the insider trading prohibition to sales (rather than decisions not to sell), the market incentives not to misuse private information that apply to EAs, and the unlikelihood that the EA has monopolistic access to the information in question. We consider these considerations by reference to a number of hypothetical scenarios. The paper argues that the law should regulate the subject by coupling a broad exemption for EAs with a “goiod faith” proviso, a continuous disclosure obligation, and a requirement to sell “all or nothing” of a holding of listed securities.

Selective Disclosures in the Public Capital Markets

Author(s): Choi, Stephen | Abstract: Publicly-traded corporations contain a wealth of non-public material information. Insider trading prohibitions limit the ability of corporate insiders to profit from this information advantage through trades in their own corporations' securities. Some may view the SEC's recently promulgated Regulation FD as complementary to restrictions on insider trading, limiting the ability of firms to confer on outsiders a similar inside information advantage through selective disclosures. The employment of selective disclosures to favor outside investors and analysts, nonetheless, may provide a number of benefits to all shareholders of a corporation. Selective disclosures, for example, may help subsidize the formation of blocks of shares that help monitor managers for agency problems. Selective disclosures also may provide firms a low-cost and flexible means of conveying even confidential information indirectly into the capital markets. The Article contends that the real risk of selective disclosures lies with the potential for managers to co-opt such disclosures for their own opportunistic endeavors. Regulation FD, however, represents an untailored and overly broad response to the risk of opportunism. Instead, the Article sets forth a number of more tailored regulatory responses that allow firms to provide selective disclosures in situations where overall shareholder welfare is enhanced while curtailing more opportunistic uses. Prepared for the Dykstra Corporate Governance Symposium at the University of California, Davis School of Law (2001).

“Citizens of a Free People”: Popular Liberalism and Race in Nineteenth-Century Southwestern Colombia

“Citizens of a Free People”: Popular Liberalism and Race in Nineteenth-Century Southwestern Colombia

The economic necessity for the Australian insolvent trading prohibition

This paper considers necessity for Australian insolvent trading prohibition. recommendations for provisions were couched around notions of (i) fairness, (ii) effective regulations and an ordered legal process; and (iii) a practical and convenient support of ‘‘the economic processes of community together with continuing to allow accepted, entrenched and commercially justified processes.These notions suggested an evaluation of insolvent trading prohibition on (i) public policy, (ii) legal and (iii) economic grounds. This paper comprises second part of work around Australian insolvent trading prohibition - first paper The Australian Insolvent Trading Prohibition - Why Does It Exist?: SSRN_ID1802226. It continues analysis with an evaluation of prohibition from an economic perspective. It will be seen from this evaluation that economic efficiency remains the dominant theoretical paradigm in contemporary corporate and commercial law scholarship that readily applies in critiquing Australian insolvent trading prohibition.

The Australian insolvent trading prohibition—why does it exist?

Since the test of the doctrine of the separate legal entity in Salomon v Salomon interest in stakeholders' rights has been maintained with respect to circumstances where the company approaches insolvency. This paper outlines the change in approach from 'creditor beware' at the time of Salomon to the current creditor protection view taken by the Corporations Act, currently including the Australian insolvent trading prohibition. paper is the first part of two papers, the latter being The Economic Necessity for the Australian Insolvent Trading Prohibition: SSRN_ID1802246.

The Insider Trading Prohibition: A Legal and Economic Enigma

The prohibition of insider trading in U.S. federal securities law typically is justified on fairness or equity grounds. Predictably, these arguments have had little traction in the law and economics community. At the same time, however, law and economics scholars have not coalesced around a single view of the prohibition; instead, competing economic arguments generated an extensive debate that is still active. Those law & economics scholars who favor deregulation of insider trading typically argue that efficiency is the sole basis for analyzing a legal regime, and that the prohibition lacks any rational economic basis. This article critiqued two pro deregulation arguments: (1) the effect of insider trading on the pricing of securities and (2) the claim that insider trading is an efficient compensation scheme. The article found neither argument persuasive. Those who favor regulating insider trading typically respond either by rejecting the claim that efficiency is the controlling criterion or by attempting to show that the prohibition is justifiable on efficiency grounds. The pro regulation arguments critiqued herein include: (1) insider trading injures the firm whose securities were traded; (2) insider trading injures shareholders of the firm whose securities were traded; and (3) insider trading violates norms of fairness. In sum, this article contended that neither side had carried the field, but suggested that the argument in favor of regulation probably was winning at the time. The article concludes with some observations on the concept of efficiency as a normative principle.

A Critique of the Insider Trading Sanctions Act of 1984

Congress intended that the Insider Trading Sanctions Act of 1984 should increase the deterrent effect of the insider trading prohibition without changing the substantive common law governing insider trading cases. Towards that end, the Act created a civil penalty of up to three times the profit gained, or loss avoided, through trading while in possession of material nonpublic information. This article examines the Act and considers its probable effect on insider trading. the article begins with an historical overview of the development of the insider trading prohibition. The article then discusses the adoption of the Act and examines its provisions in the context of then-existing law. Finally, the article criticizes the Act, suggesting that it will not have the deterrent effect anticipated by its drafters, and examines the possible effects of the ITSA on the further development of the federal insider trading prohibition.

The Organization of Global Financial Markets

The paper discusses the function of law in the formation of global financial markets and how this process affects at the same time the traditional concept of law. The examples used to illustrate this point include the prohibition of insider trading, the battle over accounting standards, the changing framework of capital adequacy rules for commercial banking, and the reshaping of the structure of important market participants in the U.S., in Germany, and in Japan.

Substitutes for Insider Trading

When insider trading prohibitions limit the ability of insiders (or of a corporation itself) to use material non-public information to trade a particular firm's stock, there may be incentive to use the information to trade instead on the stock of that firm's rivals, suppliers, customers, or the manufacturers of complementary products. We refer to this form of trading as trading in stock substitutes. Stock substitute trading by a firm is legal. In many circumstance, substitute trading by employees is also legal. Trading in stock substitutes may be quite profitable, and there is anecdotal evidence that employees often engage in such trading. Our analysis suggests that substitute trading is less socially desirable than traditional insider trading. We recommend a set of disclosure rules designed to clarify existing law and provide information on the extent of stock substitute trading. We also discuss possible changes in the law that might limit inefficient trading in stock substitutes.

Substitutes for Insider Trading

When insider trading prohibitions limit the ability of insiders (or of a corporation itself) to use material non-public information to trade a particular firm's stock, there may be incentive to use the information to trade instead on the stock of that firm's rivals, suppliers, customers, or the manufacturers of complementary products. We refer to this form of trading as trading in stock substitutes. Stock substitute trading by a firm is legal. In many circumstance, substitute trading by employees is also legal. Trading in stock substitutes may be quite profitable, and there is anecdotal evidence that employees often engage in such trading. Our analysis suggests that substitute trading is less socially desirable than traditional insider trading. We recommend a set of disclosure rules designed to clarify existing law and provide information on the extent of stock substitute trading. We also discuss possible changes in the law that might limit inefficient trading in stock substitutes.

Illicit business: accounting for smuggling in mid‐sixteenth‐century Bristol

S muggling has long been recognized as ‘one of the most serious, and certainly most baffling problems’ to confront the student of Britain’s pre-nineteenth-century commercial history. The problem arises because, while the size, nature, and direction of the nation’s legitimate trade can be determined through official commercial records, it is not clear to what extent the statistics derived from these sources represent a reliable indicator of the nation’s overall trade. The difficulty is that during the centuries between the first imposition of wool duties in 1275 and the liberalization of trade in the mid-nineteenth century, high tariffs and prohibitions created many incentives for merchants to avoid the legitimate avenues of commerce. The result, as contemporaries recognized, was that smuggling could, at least in some commodities, account for the bulk of total trade. While most studies of the subject have concentrated on the eighteenth century, large-scale smuggling was not a new development in that period. Indeed, on the basis of official expressions of concern in the activity, it would appear that a substantial illicit trade had been in existence since at least the mid-sixteenth century, when the Crown began to impose greater restrictions and higher duties on external trade. Thereafter the illicit trade flourished on the back of trading prohibitions, quasi-legal royal impositions, and rising taxes on both internal and external trade. In the end, despite the development of the revenue service into the largest and most powerful arm of the civil state, all attempts to crush the illicit trade failed and its decline from the 1840s had more to do with the passage of free trade legislation than the actions of the revenue men. For those interested in Britain’s economic development in the period

Opium use in Turkmenistan: a historical perspective.

This paper presents a picture of how the patterns of opium use have changed in Turkmenistan over more than 100 years and the relationship between these transformations and formal and informal social controls of drug use. From the late 18th century, when opium use began to become a social problem, informal control weakened. Eventually, in the late 19th century, formal control was introduced, aimed at the prohibition of drug trade and use. From that time, the intended and unintended outcomes of implemented policies led to changes in the demographic patterns of users and the social-medical consequences of opiate use. The anti-drug policies, where criminal prohibition coexisted with strategies aimed at raising the population's general living standards and at providing free access to health care, were effective up to the early 1980s. New political and social-economic realities in the 1980-90s have radically changed the drug scene in the country, with heroin trade and use as the main concerns. The government's reaction, while following the old paths, has included new elements, based mainly on ideas of national consolidation.

Insider Trading: An Overview

Insider trading is one of the most controversial aspects of securities regulation, even among the law and economics community. One set of scholars favors deregulation of insider trading, allowing corporations to set their own insider trading policies by contract. Another set of law and economics scholars, in contrast, contends that the property right to inside information should be assigned to the corporation and not subject to contractual reassignment. Deregulatory arguments are typically premised on the claims that insider trading promotes market efficiency or that assigning the property right to inside information to managers is an efficient compensation scheme. Public choice analysis is also a staple of the deregulatory literature, arguing that the insider trading prohibition benefits market professionals and managers rather than investors. The argument in favor of regulating insider trading traditionally was based on fairness issues, which predictably have had little traction in the law and economics community. Instead, the economic argument in favor of mandatory insider trading prohibitions has typically rested on some variant of the economics of property rights in information. A comprehensive bibliography is included.

The Taiwan-China Connection: Democracy and Development across the Taiwan Strait , and: Fujian: Gateway to Taiwan (review)

Reviews 175 Tse-Kang Leng. The Taiwan-China Connection: Democracy and Development across the Taiwan Strait. Transitions—Asia and Asian America. Boulder, Colorado: Westview Press, 1996. xiv, 157 pp. Hardcover $59.00, ISBN 0-8133-2982-5. Paperback $16.95, isbn 0-8133-9006-0. Brian Hook, editor. Fujian: Gateway to Taiwan. Regional Development in China, vol. 2. Hong Kong: Oxford University Press, 1996. xvii, 161 pp. Hardcover $69.00, isbn 0-19-586180-9. Paperback, isbn 0-19-586181-7. Erratum: The title, but not the review, ofthefirst book above appeared in the Table ofContents and on page 140 ofthe CRI 4:2 issue. We arepublishing the complete review in this issue. The Editors apologizefor any confusion or inconvenience this mistake may have caused. In the scholarship ofdevelopment, die statist approach, focusing on both a strong state autonomy and strong state capacity in explaining the economic miracle in East Asia, has recendy been challenged. This approach argues that in some countries the state indeed plays a leading role in development by facilitating rapid economic growth, whereas in other countries the state behaves like a predator, consuming the fruit of the burgeoning economy. Leng Tse-Kang's The TaiwanChina Connection, based on his doctoral dissertation, represents an effort to challenge the statist view. Leng focuses his analysis on the making of economic policy across the Taiwan Strait in the period of democratic transition on the island , arguing against the applicability of the "strong state paradigm" to post-authoritarian Taiwan. Leng begins with Taiwan's democratization process, arguing that the changed relationship between state and society in democratic Taiwan has weakened both the autonomy and capacity ofthe state, the strength ofwhich had been responsible for Taiwan's economic take-off in the authoritarian era. As Taiwan underwent democratization in the 1990s, the factional politics within the top hierarchy of the KMT regime and its alliance with business groups in pursuit ofmarket opportunities in China forced the regime to make concessions in the making ofits cross-Strait economic policy. Instead of the strong-state policy that had existed in the authoritarian decades, the KMT regime found itself now driven, on the one hand, by the pro-unification faction within the KMT and the pro-independence drive ofthe opposition party and, on the other, by strong pressure from the busi-© 1998 by Universityvvr 7 > ' _ íu ... „ ness sector, which demanded relaxed policies that would permit profit-seeking on ofHawai ? Press' r r r o the mainland. Since the top leaders ofthe KMT regime have always stood in the gray area between unification and independence, the regime has suffered from a 176 China Review International: Vol. 5, No. 1, Spring 1998 severe conflict of interest among the different departments within the state bureaucracy , and there has been a lack ofpolicy coordination. According to Leng, the Mainland Affairs Council (MAC), the predominant agent responsible for Taiwan's cross-Strait policy, always gives national security first priority, and this often negates the business interests promoted by the Ministry of Economic Affairs. On the other hand, the MAC has often been in open conflict with the Strait Exchange Foundation (SEF), as it tries to put pressure on the SEF and suppress its autonomy, since the SEF, a nongovernment agency, engages in direct dialogue and negotiation with China on behalf of the MAC. Moreover, despite the official prohibition of direct investment and trade across the Strait, many Taiwanese business enterprises, botìi large and small, have joined the rush to the mainland without sanction from the state. The Taiwanese state has found itself crippled, unable to stop the wave of profit-seeking in China. According to Leng, as Taiwan's export-led economy is increasingly dependent on the Chinese market, this gives China the leverage to manipulate Taiwan's domestic economy and increase Taiwan's political vulnerability rather than leading to the mutual benefits promoted by liberal economists. Despite his illuminating analysis ofTaiwan's recent political developments and its economic relationship widi China, Leng's polemic against the "strong state paradigm" suffers from two difficulties. First, even though he refutes the "strong state paradigm" in post-authoritarian Taiwan, Leng seems almost unscrupulously to embrace its existence in the...

Reduction of singleton reactors against swine vesicular disease virus by a combination of virus neutralisation test, monoclonal antibody-based competitive ELISA and isotype specific ELISA

Pigs which are serologically positive for swine vesicular disease virus (SVDV) but which show no clinical signs and for which there is neither a relevant history of the disease on the holding nor contact with a known outbreak are considered as singleton reactors. False positive serological results for an epizootic disease, like SVD, in a non-vaccinated population or in imported animals are of great concern to international trade. For the virus neutralisation test, the gold standard for SVD, singleton reactors are found at a level of 1–3/1000. Singleton reactors also occur when other serological testing methods are used. The number of animals finally considered as singleton reactors can be reduced considerably by performing three different serological tests (virus neutralisation test, monoclonal antibody-based competitive ELISA and isotype specific ELISA) on the same serum. A serological profile of the animal can be derived by analysing the results in greater detail. This procedure can reduce considerably the number of pig holdings on which a prohibition of movement and trade needs to be imposed without requiring analysis of supplementary samples.

Changes in the economic use value of elephant in Botswana: the effect of international trade prohibition

Analysis of the value of different potential combinations of elephant use in Botswana at various times since 1989 indicates that, with the 1990 CITES Appendix I listing, when international trade in elephant products was effectively banned, about half of potential, economic, use values were lost. Evidence suggests that the ban has helped slow the species' decline in many range states. But data from Botswana, where poaching levels have been low, indicate that most elephant range will be converted to livestock keeping in the next 15 years unless local communities can realise high elephant use values. The trade ban has jeopardised the future of the elephant in Botswana. The solution to elephant conservation involves investment in land and management, within appropriate property rights, for the existence of natural elephant populations. If the international community is serious about elephant conservation, it should actively assist African governments and local communities with funds and expertise for this. Total economic value should be maximised, including complementary combinations of non-consumptive and selected consumptive use values, as well as non-use values. African elephant values must contribute competitively to African rural development.

Ecology, practice and policy of black cherry (Prunus serotina Ehrh.) management in Belgium

Black cherry (Prunus serotina Ehrh.), a tree native of North America, was introduced in Europe in the 17th century and applied as a forest tree from the end of the 19th century onwards. It was expected to produce valuable timber, even on poor sandy soils, but it seldom did. Until the fifties, it was massively underplanted in Scots pine (Pinus silvestris L.) stands where it was believed to ameliorate the soil. Nowadays, as a consequence of its offensive reproduction strategy and important atmospheric ammonia immissions, black cherry has completely overgrown the substorey of thousands of hectares of Scots pine forest in Belgium, Germany and the Netherlands, preventing regeneration of any species but itself. Some ecological, silvicultural and forest political aspects of this issue are presented and discussed. This paper shows that the soil ameliorating properties of black cherry are doubtful and suggests that it might be an important competitor of the timber crop for nutrients and water. Furthermore, it illustrates that the abundance of black cherry forces silviculture to maintain an everlasting age class system with clearcutting and very costful black cherry combat operations (mechanical or/and chemical) during each regeneration period. It finally states that the present forest policy in Belgium, that made the option to reconvert the first generation pine stands into mixed and more uneven aged stands, only can be realized with an efficient control of black cherry. In that respect, an integrated black cherry management plan issuing a total prohibition of planting and trade, an obligatory control of seed trees in public forests and a subsidized combat in private forests, is proposed in this paper.

Insider Trading: Should It Be Prohibited?

Insider trading moves forward the resolution of uncertainty. Using a rational expectations model with endogenous investment level, I show that, when insider trading is permitted, (i) stock prices better reflect information and will be higher on average, (ii) expected real investment will rise, (iii) markets are less liquid, (iv) owners of investment projects and insiders will benefit, and (v) outside investors and liquidity traders will be hurt. Total welfare may increase or decrease depending on the economic environment. Factors that favor the prohibition of insider trading are identified.

Optimal Contracting and Insider Trading Restrictions

Restrictions on trading by insider agents are analyzed using an optimal contracting framework. Prohibition of insider trading is shown to be Pareto preferred if, and only if, a revelation or moral hazard problem exists. If prohibition of insider trading is valuable, then trade registration with a delay is shown to be as valuable as complete prohibition. Short selling restrictions, however, are generally of less value than complete prohibition. Finally, regulation of insider agent trading by governmental institutions and/or professional associations is discussed.

Optimal Contracting and Insider Trading Restrictions

ABSTRACTRestrictions on trading by insider agents are analyzed using an optimal contracting framework. Prohibition of insider trading is shown to be Pareto preferred if, and only if, a revelation or moral hazard problem exists. If prohibition of insider trading is valuable, then trade registration with a delay is shown to be as valuable as complete prohibition. Short selling restrictions, however, are generally of less value than complete prohibition. Finally, regulation of insider agent trading by governmental institutions and/or professional associations is discussed.