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Ethical Choices and Legal Obligations_5

Tham khảo tài liệu 'ethical choices and legal obligations_5', khoa học xã hội, hành chính - pháp luật phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | The Multiple Dimensions of Conflicts of Interest 123 information he knew that Qwest s dire financial straits made it unlikely that it would achieve its publicly announced earnings targets. When a publicly traded company fails to meet its earnings targets its stock price usually falls. By selling before the bad news became public he made a huge sum of money. The result Nacchio looks like he is on his way to jail.7 The court sentenced him to six years in prison and fined him 19 million. He was also ordered to forfeit 52 million in stock-trading profits. The insider trading rules do not allow violations to be classified like category three conflicts of interest. The government doesn t have to show that the insider s trades actually harmed others. The policy enacted by Congress administered by the SEC and not challenged by administrations of either political party since inception is that the public securities markets need to be fair to all. Fairness means that every investor who wishes to buy or sell securities has access to the same public information as every other. Fairness resides in the procedure. That s why the accused inside trader can t try to escape civil liability or a criminal conviction by saying in a variation of the win-win theme I won and you at least didn t lose for example because my trades were too small to affect the market price at which other people traded. Because disclosure is generally impractical it s easiest to understand the SEC s insider trading rules as forbidding the practice. Before we look at the need for internal conflict-of-interest disclosure requirements within a company we need to look at a counterexample to the idea that win-win outcomes can justify self-dealing. This can be found in the law governing self-interested transactions by corporate officers and directors. SELF-INTERESTED TRANSACTIONS AND THE DOCTRINE OF ENTIRE FAIRNESS Probably the longest standing concern of corporate law write two scholars of the subject has been that