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The Securities and Exchange Act
the US law that establishes rules for the operation of the stock market and guarentees the rights of shareholders (first passed in 1934). Enforced by the Securities and Exchange Commission (SEC).
Shareholders basic legal rights
- *receive accurate annual financial reports
- *receice their share of dividends, if declared
- *sell their shares to others , if they choose
- *vote (proportional to share ownership)
Shareholders can vote on
- -select members of the board of directors
- -approve or disapprove of mergers
- -approve or disapprove of shareholder proposals
key elements of insider trading
- -trade a stock
- -tip off someone else to trade a stock with an expectation of direct or indirect benefit
- -on the basis of non-public information
- -acquired through a "breach of trus" (the person knows the information is confidential)
Why insider trading is wrong
- -undermines public confidence
- -hurts innocent traders
- -non-public information is a company's "property"
- 1.right to safety
- 2.right to be informed
- 3.right to choose
- 4.right to be heard
- some say that a fifth right should be added
- 5.right to privacy
How are consumer rights protected?
- *consumerism- consumers should organize to defend their own rights
- *government regulation- the govt should protect consumers through laws and regulations
- *industry self-regulation- businesses should voluntarily act responsibly towards its customers
- *courts- consumers should sue companies whose products harm them
What would you like to do?
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