An event based approach for quantifying the effects of securities fraud in the IT industry

Detecting the incidence and impact of illegal insider trading is a difficult process since access to the actual trading records of insiders that overlap precisely with fraudulent events is difficult. This paper provides a case study of a specific IT stock in Canada that was successfully prosecuted i...

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Bibliographic Details
Published in:Information systems frontiers 2017-06, Vol.19 (3), p.457-467
Main Authors: Switzer, Lorne N., Wang, Jun
Format: Article
Language:English
Subjects:
Business and Management
Control
Information systems
Information technology
Insider trading
IT in Business
Management of Computing and Information Systems
Operations Research/Decision Theory
Securities fraud
Studies
Systems Theory
Technology stocks
Violations
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Summary:Detecting the incidence and impact of illegal insider trading is a difficult process since access to the actual trading records of insiders that overlap precisely with fraudulent events is difficult. This paper provides a case study of a specific IT stock in Canada that was successfully prosecuted in the Canadian court system for market manipulation and illegal insider trading violations. The study provides a quantification of the impact of insider trading activities by the President directly through his own account or through accounts under his control, and illustrates the impact of some off-exchange transactions by the impugned parties. Overall, the costs of the insider trading violations are quite high, given the significant wealth effects produced by the events surrounding this case.
ISSN:1387-3326
1572-9419
DOI:10.1007/s10796-017-9753-3