REGULATION OF INSIDER TRADING IN NIGERIA AND USA: A COMPARATIVE ANALYSIS

Abstract

It  cannot  be  over-emphasized  that  a  congenial  legal  environment  provides  for  and  contributes  to  the  effective development and functioning of capital market. As such, high standards of corporate governance and transparency are essential to the development of capital markets in Nigeria. Nevertheless, the disclosure of information regarding a company enables investors to take decisions regarding investments in securities of such a company and for prices of securities to accurately reflect information about a company; such information should be equally available to all market  participants  at  the  same  time.  However,  persons  in  the  company  itself  or  otherwise  concerned  to  the company  are  in  possession  of  certain  information  before  it  is  actually  made  public.  The  knowledge  of  this unpublished  price  sensitive  information  in  hands  of  persons  connected  to  the  companies  puts  them  in  an advantageous  position  over  others  who  lack  it.  However,  the  insider  trading  legislation  have  not  been  quite  very effective in providing substantial comfort to investors. As such, there is little doubt that some reforms are needed on the  deficiencies in the  regulation of insider trading in Nigeria. From  comparative perspective, this paper analysesthe regulation of insider trading in Nigeria and USA. This is primarily to address certain flaws that are embedded in the  regulation  and  to  recommend,  where  necessary,  possible  recommendations  that  could  be  utilized  by  policy makers to enhance the combating of insider trading in Nigeria.