1. Write a short note on insider trading Ans.

Insider trading refers to trading on price sensitive information by the company employees or individuals closely connected with the firm. The information has not been disclosed to other market participants. It has been often misunderstood .It is thus important to to identify between the ethical and legal aspects of insider trading. Insider trading has been criminalized and blamed for many of financial scandals. It is considered unethical and blamed because it is thought to violate equality of opportunity. All those seeking a particular good should be allowed to compete for it equally on basis of merit but this not usually that happens in insider dealing. Equality of opportunity is clearly violated when there is a ban preventing an individual from trading, as he bears no relationship with the company. Such instances take place when insider trading is officially prohibited. Thus all that is required for equality is that rules should be applied to each and every person equally and no one should be excluded from transactions. Insider trading has been criticized because it does not give a level playing field between insiders and outsiders. Shareholders who are not entitled to know information about the company are limited to information sharing. The primary victims of unethical insider trading are shareholders as they can lose money when corporate insiders harm the ownership value and cause the company share price to fall. Unethical insider trading in the stock market can harm the exchange as a whole because investors will not be willing to trade on that exchange that does not to give the shareholders their right. Insider trading is not the unethical as it appears to be because the manner of acquiring the information and the subject of information are all essential to determine the ethical nature of insider trading. Also insider trading that is performed with full support and knowledge of shareholders is not unethical.

2. Short note on Characteristics of fraudsters Ans. The following report identifies some general characteristics that may be found in a profile of those who commit occupational fraud.

INTELLIGENT Fraudsters may feel challenged by "secure " systems. The individual may be bored by the routineness of their job.

EGOTISTICAL The perpetrator may be scornful of obvious control flaws. The employee feels that beating the organization is a challenge and not a matter of economic gain alone. Also, the individual may feel tired of "dumb" managers. INQUISITIVE The employee is overly curious about the job or organization. The employee may be tempted by the discovery of something new, such as a computer vulnerability. RISK TAKER The individual is willing to bend the rules and take chances. The employee fails to consider the consequences of being caught. RULE BREAKER The employee takes short cuts. He/She self-justifies infractions of laws, rules, etc. Employee may think "everybody else does it, why not me?". HARD WORKER The employee is the first to arrive in the morning and the last to leave at night. The employee takes few vacations or is reluctant to be away from the office. UNDER STRESS The employee is suffering from a personal crisis, such as a financial problem, bad marriage, etc. GREEDY The employee is not satisfied with the resources available to him. He/She desires more than they have. FINANCIAL NEED The employees need cannot be satisfied with available resources. Financial need can be the result of major financial losses, drug or alcohol dependencies, illness, gambling losses, greed, or overextended credit. DISGRUNTLED OR A COMPLAINER The employee feels abused by the employer and wants to get even. He/She feels frustrated or dissatisfied about some aspect of their job. The employee may try to get even or take what he/she "really deserves". The employee may feel pay is not commensurate with their job responsibility. In general, the employee is frustrated with the organization. Frustration can result from a number of situations, such as not being promoted, a perception of being underpaid, dislike for a supervisor, a feeling of alienation from other employees, a lack of devotion to the company, fear of losing ones job, or boredom with the work. The employee has low job morale. BIG SPENDER The employee is living beyond his/her means. If the demands of an employees lifestyle exceed his/her pay, the employee is a candidate to perpetrate a fraud. The employee may make extravagant purchases or have a lavish lifestyle. OVERWHELMING DESIRE FOR PERSONAL GAIN The employee may desire personal gains from their job such as promotions, bonuses, or recognition. PRESSURED TO PERFORM The employee may be pressured to meet unrealistic financial expectations.

CLOSE RELATIONSHIP WITH VENDORS/SUPPLIERS The employee may develop a close or personal relationship that extends beyond proper business relations. The fraudster can be a CEO, a mail room clerk, or

anyone in betweenall it takes is opportunity, need, and rationalization. Lower level white-collar employees commit most frauds, but the largest most damaging frauds are committed by senior executives and owners of businesses. Losses caused by managers who committed fraud are four times greater than those committed by lower level employees.
Thus above all are the characteristics of fraudsters and it is rightly said that Given the right pressures, opportunities, and rationalizations, every employee is capable of committing fraud. so one should be very much alert of fraudsters.