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briefcase full of money

What is it?

The definition of insider trading is when someone who has access to nonpublic information about a security sells or buys it in order to make a profit. This is illegal because the information is private and is not to be used to allow someone to either sell off shares because they will most likely go down or to buy shares because they have information about their increase in value.   Once the information has been made public, however, buying and selling of the security becomes legal.

Why is it in the news?

Stories about insider trading come up regularly as they are often brought to trial when discovered. There have been recent trials in New York, the most famous of which was the one of billionaire Raj Rajaratnam, the Galleon Group LLC hedge fund manager, as it was the biggest victory the US government has had in trying to convict insider traders.

How can I use it in class?

Write the word: ‘white-collar crime’ on the board and ask students if they understand what this means. You can explain that these crimes are generally committed by people in higher positions who have access to nonpublic information and usually cheat others out of money. Ask student to brainstorm different types of these crimes. Ask them if they have heard of any examples of these crimes in their countries.

Vocabulary

Ask students to match these legal words with their definitions. Check answers, then ask students to read the two articles below.

1 alleged  
2 be convicted  
3 plead guilty 
4 be released on bail 
5 arraignment   
6 prosecutor  
7 be arrested 
8 commit fraud 
9 plea deal  
10 conspiracy  
11 probe  
12 be charged with a crime

A a plan to do something illegal with other people
B be allowed to leave jail for a time after you have paid money to ensure you will show up for trial
C be taken to jail because the police have reason to believe you have committed a crime
D a legal representative of the government who officially accuses someone of a crime
E get money by deceiving people 
F an investigation
G be accused of breaking the law
H said or thought to be illegal although there is no proof
I admit you have broken a law
J a process in which someone is formally accused of a crime and asked if they are guilty or not
K negotiation between a defendant’s lawyer and the prosecutor in which the defendant admits he or she is guilty in order to get a less severe sentence
L be declared guilty of a crime in court

Discussion questions
  • Do you think white-collar criminals are treated harshly enough? The second article mentions the types of prisons many are sent to. Is this the same in your country?
  • Why do you think people get involved in white-collar crime?
  • What have you heard about insider trading? Do you think this is very widespread? Why or why not?
  • Do you agree with the point of view of the writer of the second article? Why do you think he is being ironic?

Where can I read about it?

  • Karunatilaka Pleads Guilty in Expert-Networking Insider Case. Bloomberg, May 12th  2011
  • Rajaratnam Gives Reasons to Be Glad Trial Ended: Susan Antilla. Bloomberg, May 13th  2011

Key

Vocabulary

1H, 2L, 3I, 4B, 5J, 6D, 7C, 8E, 9K 10A, 11F, 12G

 

 

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