Corporate Governance and Insider Trading Regulations: a Comparative Study of India and United States

Abstract

Investments in the present scenario are subject to have a stake in different organizations. By investing, an investor becomes a stakeholder of an organization. These stakeholders have a direct or indirect interest in the functioning of the organization. A stakeholder of an organization is rewarded with profits, dividends, bonuses and through another financial medium, but on the other hand, they are also exposed to the various kinds of risks such as ‘insider trading~ Insider trading might be legal or prohibited activity depending on when the trade is made by the insider. Stakeholders of the organization have a great disadvantage due to the lack of important insider non-public information. It is a known fact that good corporate governance always relies on transparency and accountability towards the stakeholders, so looking at the threat involved into such kind of transactions it is important to build strong regulations which will protect the rights of the innocent stakeholders. Comparing to the world India has not a much stronger set of regulations on this term. Comparing to India, United States regulated much earlier to Indian jurisdiction. United States adopt traditionally a more successful pattern of enforcement than its Indian counterpart. This study compares the governance of India with the United States in terms of insider trading. This research work is an earnest attempt in this direction to give an insight to the government and the body corporate to set their insider trading regulations and assimilate certain effective features from the legal system of United States.