What Is the General Reason for Restrictions Against Insider Trading

question 12

Multiple Choice

What is the general reason for restrictions against insider trading under the Securities Exchange Act of 1934?

• A) Corporate insiders should not own stock in the corporation because it is a conflict of interest.
• B) Use of inside information is unfair to the other party to the transaction, and goes against the philosophy of allowing all participants in the market to have the same information.
• C) Insider trading generally leads to lower stock prices.
• D) Insider trading results in an imbalance of buyers and sellers in the market.
• E) The value of a prospectus is compromised when insider trading is conducted.