ISA 2024 Expected to Boost Nigerian Capital Market Growth
Those engaged in insider trading and market manipulation faced inadequate penalties that did little to deter such unethical behavior. Additionally, the existing regulatory framework lacked the teeth necessary to effectively prevent these harmful practices. Insider trading refers to the illegal buying or selling of securities based on non-public, material information about a company. Market manipulation involves artificially inflating or deflating the price of securities to deceive investors or manipulate the market for personal gain. Both activities undermine the integrity of financial markets and erode trust among investors.
In the context of insider trading, individuals with access to privileged information exploit their position for personal profit, often at the expense of other investors. This unethical behavior not only distorts market prices but also creates an uneven playing field where insiders have an unfair advantage over the general public. Despite laws and regulations aimed at preventing insider trading, the penalties for such misconduct were insufficient to act as a true deterrent. As a result, the practice continued to persist, undermining the fairness and transparency of financial markets.
Similarly, market manipulation poses a significant threat to the integrity of financial markets. By artificially influencing the price of securities, manipulators can deceive investors and drive up profits through fraudulent means. This deceptive behavior erodes investor confidence and undermines the stability of the market. However, the penalties for market manipulation were not robust enough to effectively deter individuals from engaging in such activities. As a result, manipulative practices persisted, posing a continued threat to the integrity and credibility of financial markets.
The lack of stringent penalties for insider trading and market manipulation highlighted the need for stronger regulatory measures to combat these unethical practices. By imposing stricter sanctions and enforcement actions, regulators could send a clear message that such misconduct would not be tolerated. Additionally, increased transparency and oversight in financial markets could help prevent and detect instances of insider trading and market manipulation before they escalate.
Overall, the inadequate penalties for insider trading and market manipulation failed to effectively deter individuals from engaging in these unethical practices. To maintain the integrity and fairness of financial markets, it was vital to implement stronger regulatory measures and enforcement actions to combat insider trading and market manipulation effectively. By holding perpetrators accountable and promoting transparency in financial markets, regulators could help restore trust and confidence among investors and ensure a level playing field for all participants.