Search This Blog

Tuesday, September 23, 2025

Abuse

From Wikipedia, the free encyclopedia
https://en.wikipedia.org/wiki/Abuse

Abuse is the act of improper usage or treatment of a person or thing, often to unfairly or improperly gain benefit. Abuse can come in many forms, such as: physical or verbal maltreatment, injury, assault, violation, rape, unjust practices, crimes, or other types of aggression. Some sources describe abuse as "socially constructed", which means there may be more or less recognition of the suffering of a victim at different times and societies.

Types and contexts of abuse

Abuse of authority

Abuse of authority includes harassment, interference, pressure, and inappropriate requests or favors.

Abuse of corpse

Necrophilia involves possessing a physical attraction to dead bodies that may led to acting upon sexual urges. As corpses are dead and cannot give consent, any manipulation, removal of parts, mutilation, or sexual acts performed on a dead body is considered abuse.

Abuse of discretion

An abuse of discretion is a failure to take into proper consideration, the facts and laws relating to a particular matter; an arbitrary or unreasonable departure from precedent and settled judicial custom.

Abuse of dominance

Market dominance by companies is regulated by public and private enforcement of competition law, also known as antitrust or anti-monopoly law. These laws stop companies from doing things that hurt customers or block fair competition. For example, Article 102 of the Treaty on the Functioning of the European Union (TFEU) prohibits companies in a dominant market position from abusing their power, such as through unfair pricing, limiting production, or refusing to deal with others.

Abuse of indulgences

In the Catholic Church, an indulgence is a way to reduce punishment for sin, often by prayer, pilgrimage or good works. In the Middle Ages, some Church officials demanded money in exchange both for forgiveness of sins and for other rewards such as future salvation.

Abuse of information

Abuse of information typically involves a breach of confidence or plagiarism, or extending the confidence of information beyond those authorised.

In the financial world, Insider trading can also be considered a misuse of internal information that gives an unfair advantage in investment.

Abuse of power

Abuse of power, in the form of "malfeasance in office" or "official misconduct", is the commission of an unlawful act, done in an official capacity, which affects the performance of official duties. Malfeasance in office is often grounds for a for cause removal of an elected official by statute or recall election.

Abuse of process

A cause of action in tort arising from one party making a malicious and deliberate misuse or perversion of regularly issued court process (civil or criminal) not justified by the underlying legal action.

Abuse of rank

Rankism (also called abuse of rank) is treating people of a lower rank in an abusive, discriminatory, or exploitative way. Robert W. Fuller claims that rankism includes the abuse of the power inherent in superior rank, with the view that rank-based abuse underlies many other phenomena such as bullying, racism, sexism, and homophobia.

Abuse of statistics

Abuse of trust

Abusive supervision

Abusive supervision is most commonly studied in the context of the workplace, although can arise in other areas such as in the household and at school. "Abusive supervision has been investigated as an antecedent to negative subordinate workplace outcome". "Workplace violence has combination of situational and personal factors". The study that was conducted looked at the link between abusive supervision and different workplace events.

Academic abuse

Academic abuse is a form of workplace bullying which takes place in institutions of higher education, such as colleges and universities. Academia is highly competitive and has a well defined hierarchy, with junior staff being particularly vulnerable.

Adolescent abuse

Adult abuse

Adult abuse refers to the abuse of vulnerable adults.

Alcohol use disorder

Alcohol use disorder, as described in the DSM-IV, is a psychiatric diagnosis describing the recurring use of alcoholic beverages despite its negative consequences. Alcohol use disorder is sometimes referred to by the less specific term alcoholism. There are two types of people with alcohol use disorder: those who have anti-social and pleasure-seeking tendencies, and those who are anxiety-ridden- people who are able to go without drinking for long periods of time but are unable to control themselves once they start. Binge drinking is another form of alcohol use disorder. Frequent binge drinking or getting severely drunk more than twice is classed as alcohol misuse. According to research done through international surveys, the heaviest drinkers happen to be the United Kingdom's adolescent generation.

Animal abuse

Animal abuse is the infliction of suffering or harm upon animals, other than humans, for purposes other than self-defense. More narrowly, it can be harm for specific gain, such as killing animals for fur. Diverging viewpoints are held by jurisdictions throughout the world.

Anti-social behavior

Anti-social behavior is often seen as public behavior that lacks judgement and consideration for others and may damage them or their property. It may be intentional, as with vandalism or graffiti, or the result of negligence. Persistent anti-social behavior may be a manifestation of an antisocial personality disorder. The counterpart of anti-social behavior is pro-social behavior, namely any behavior intended to help or benefit another person, group or society.

Bullying

Bullying is repeated acts over time that involves a real or perceived imbalance of power with the more powerful individual or group attacking those who are less powerful. Bullying may consist of three basic types of abuse – verbal, physical and emotional. It typically involves subtle methods of coercion such as intimidation. Bullying can be defined in many different ways. Although the UK currently has no legal definition of bullying, some US states have laws against it. Bullying is usually done to coerce others by fear or threat.

Character assassination

Character assassination is an attempt to tarnish a person's reputation. It may involve exaggeration or manipulation of facts to present an untrue picture of the targeted person. It is a form of defamation and can be a form of an ad hominem (to the person) argument.

Child abuse

Child abuse is the physical or psychological/emotional mistreatment of children. In the United States, the Centers for Disease Control and Prevention (CDC) define child maltreatment as any act or series of acts of commission or omission by a parent or other caregiver that results in harm, potential for harm, or threat of harm to a child. Most child abuse occurs in a child's home, with a smaller amount occurring in the organisations, schools or communities the child interacts with. There are four major categories of child abuse: neglect, physical abuse, psychological/emotional abuse, and sexual abuse.

Child sexual abuse

Child sexual abuse is a form of child abuse in which an adult or older adolescent abuses a child for sexual stimulation. Different forms of this include: asking or pressuring a child to engage in sexual activities (regardless of the outcome), some types of indecent exposure of genitalia to a child, displaying pornography to a child, actual sexual contact against a child, viewing or engaging in physical contact with the child's genitals for sexual purposes, or using a child to produce child pornography.

Child-on-child sexual abuse

Child-on-child sexual abuse refers to a form of child sexual abuse in which a prepubescent child is sexually abused by one or more other children or adolescent youths, and in which no adult is directly involved. This includes sexual activity between children that occurs without consent, without equality, or as a result of coercion; particularly when physical force, threats, trickery, or emotional manipulation are used to elicit co-operation.

Civil rights abuse

Clandestine abuse

Clandestine abuse is sexual, psychological, or physical abuse "that is kept secret for a purpose, concealed, or underhanded."

Clerical abuse

Cyber abuse or cyber bullying

Cyberbullying "involves the use of information and communication technologies to support deliberate, repeated, and hostile behavior by an individual or group, that is intended to harm others." - Bill Belsey.

Dating abuse or dating violence

Dating abuse is a pattern of abusive behaviour exhibited by one or both partners in a dating relationship. The behaviour may include, but is not limited to: physical abuse; psychological abuse; and sexual abuse.

Defamation

Defamation is the communication of a statement that makes a claim, expressly stated or implied to be factual, that may give an individual, business, product, group, government or nation a negative image. It is usually – but not always, a requirement that this claim be false and that the publication be communicated to someone other than the person defamed (termed the claimant).

Disability abuse

It has been noted that disabled people are disproportionately affected by disability abuse and bullying, and such activity has been cited as a hate crime. The bullying is not limited to those who are visibly disabled – such as wheelchair-users or individuals with physical differences (e.g., cleft lip) – but also those with learning disabilities, autism or developmental coordination disorder. In the latter case, this is linked to a poor ability in physical education, and this behaviour can be encouraged by an ignorant physical education teacher. Abuse of disabled people is not limited to schools; there are many known cases in which disabled people have been abused by staff of a "care institution", such as the case revealed in a BBC Panorama programme on a Castlebeck care home (Winterbourne View) near Bristol, leading to its closure and suspension or firing of staff members.

Discriminatory abuse

Discriminatory abuse involves picking on or treating someone unfairly because something about them is different; for example concerning:

Discriminatory laws such as redlining have existed in many countries. In some countries, controversial attempts such as racial quotas have been used to redress negative effects of discrimination.

Other acts of discrimination include political libel, defamation of groups and stereotypes based on exaggerations.

Domestic abuse or domestic violence

Domestic abuse can be broadly defined as any form of abusive behaviours by one or both partners in an intimate relationship, such as marriage, cohabitation, family, dating, or even friends. Domestic violence has many forms, including:

  • physical aggression (hitting, kicking, biting, shoving, restraining, throwing objects), or threats thereof
  • sexual abuse
  • emotional abuse
  • financial abuse (withholding money or controlling all money, including that of other family members)
  • social abuse (restricting access to friends or family, insulting or threatening friends or family), controlling or domineering
  • intimidation
  • stalking
  • passive/covert abuse
  • economic deprivation

Depending on local statues, the domestic violence may or may not constitute a crime, also depending on the severity and duration of specific acts, and other variables. Alcohol consumption and mental illness have frequently been associated with abuse.

Economic abuse

Economic abuse is a form of abuse when one intimate partner has control over the other partner's access to economic resources, which diminishes the victim's capacity to support him/herself and forces him/her to depend on the perpetrator financially.

Elder abuse

Elder abuse is a type of harm to older adults involving abuse by trusted individuals in a manner that "causes harm or distress to an older person". This definition has been adopted by the World Health Organization from a definition put forward by Action on Elder Abuse in the UK. The abuse includes violence, neglect, and other crimes committed against an elderly person and their forms include physical, mental, and financial abuses as well as passive and active neglect.

Emotional abuse

While there is an absence of consensus as to the precise definition of emotional abuse, it is classified by the U.S. federal Child Abuse Prevention and Treatment Act as a form of mental injury. The typical legal definition, particularly in the area of child welfare, accepted by the majority of U.S. states describes it as injury to the psychological cap|acity or emotional stability as evidenced by an observable or substantial change in behavior, emotional response or cognition.

Employee abuse

False accusations

False accusations (or false allegations) can be in any of the following contexts:

Flag abuse

Flag abuse (or flag desecration) is a term applied to various acts that intentionally destroy, damage or mutilate a flag in public, most often a national flag. Often, such action is intended to make a political point against a country or its policies. Some countries have laws forbidding methods of destruction (such as burning in public) or forbidding particular uses (such as for commercial purposes); such laws may distinguish between desecration of the country's own national flag and flags of other countries. Countries may have laws protecting the right to burn a flag as free speech.

Gaming the system

Gaming the system (also called bending the rules, gaming the rules, playing the system, abusing the system, milking the system, or working the system) can be defined as using the rules and procedures meant to protect a system to instead manipulate the system for a desired outcome.

Gaslighting

Gaslighting is manipulation through persistent denial, misdirection, contradiction, and lying in an attempt to destabilize and delegitimize a target. Its intent is to sow seeds of doubt in the targets, hoping to make them question their own memory, perception, and sanity. Instances may range from the denial by an abuser that previous abusive incidents ever occurred up to the staging of bizarre events by the abuser with the intention of disorienting the victim. The term owes its origin to Gaslight, a 1938 play and 1944 film, and has been used in clinical and research literature.

Gay abuse or gay bashing

Gay bashing and gay bullying are verbal or physical abuse against a person perceived by the aggressor to be gay, lesbian, or bisexual, including people who are actually heterosexual, or of non-specific or unknown sexual orientation.

Harassment

Harassment covers a wide range of offensive behaviour. It is commonly understood as behaviour intended to disturb or upset. In the legal sense, it is behaviour which is found threatening or disturbing.

Power harassment is harassment or unwelcome attention of a political nature, often occurring in the environment of a workplace.

Sexual harassment refers to persistent and unwanted sexual advances, typically in the workplace, where the consequences of refusing sexual requests are potentially very disadvantageous to the victim.

Hate crimes

Hate crimes occur when a perpetrator targets a victim because of his or her perceived membership in a certain social group; usually defined by racial group, religion, sexual orientation, disability, ethnicity, nationality, age, gender, gender identity, or political affiliation.

"Hate crime" generally refers to criminal acts which are seen to have been motivated by hatred of one or more of the listed conditions. Incidents may involve physical assault, damage to property, bullying, harassment, verbal abuse or insults, or offensive graffiti or inflammatory letters (hate mail).

Hazing

Hazing is considered any activity involving harassment, abuse, or humiliation as a way of initiating a person into a group.

Hazing is seen in many different types of groups; including within gangs, clubs, sports teams, military units, and workplaces. In the United States and Canada, hazing is often associated with Greek-letter organisations (fraternities and sororities). Hazing is often prohibited by law and may be either physical (possibly violent) or mental (possibly degrading) practices. It may also include nudity or sexually oriented activities.

Human rights abuse

Human rights are "basic rights and freedoms to which all humans are entitled." Examples of rights and freedoms which have come to be commonly thought of as human rights include civil and political rights, such as the right to life and liberty, freedom of expression, and equality before the law; and economic, social and cultural rights, including the right to participate in culture, the right to be treated with respect and dignity, the right to food, the right to work, and – in certain countries – the right to education.

Humiliation

Humiliation is the abasement of pride, which creates mortification or leads to a state of being humbled or reduced to lowliness or submission. It can be brought about through bullying, intimidation, physical or mental mistreatment or trickery, or by embarrassment if a person is revealed to have committed a socially or legally unacceptable act.

Incivility

Incivility is a general term for social behaviour lacking in civility or good manners, ranging from rudeness or lack of respect towards elders; vandalism and hooliganism; or public drunkenness and threatening behaviour.

Institutional abuse

Institutional abuse can typically occur in a care home, nursing home, acute hospital or in-patient setting and can be any of the following:

Further reading

  • Barter, Christine (1998). Investigating Institutional Abuse of Children (Policy, Practice, Research). National Society for the Prevention of Cruelty to Children (NSPCC). ISBN 978-0902498846
  • Beker, Jerome (1982). Institutional Abuse of Children and Youth (Child & Youth Services). Routledge.
  • Manthorpe J, Penhale B, Stanley N (1999). Institutional Abuse: Perspectives Across the Life Course. Routledge.
  • Westcott, Helen L (1991). Institutional Abuse of Children – From Research to Policy: A Review (Policy, Practice, Research S.) National Society for the Prevention of Cruelty to Children (NSPCC).

Insult

An insult is an expression, statement or behaviour considered to be degrading and offensive.

Intimidation

Intimidation involves intentional behavior that would cause a person of reasonable apprehension to fear harm or injury. Within the context of a criminal prosecution it is not necessary to prove that the behavior caused the victim to experience terror or panic. "The calculated use of violence or the threat of violence to attain goals political, religious, or ideological in nature... through intimidation, coercion, or instilling fear" can be defined as terrorism.

Legal abuse refers to abuses associated with both civil and criminal legal action.

Market abuse

Market abuse may arise in circumstances where financial investors have been unreasonably disadvantaged, directly or indirectly, by others who:

  • have used information which is not publicly available (insider dealing)
  • have distorted the price-setting mechanism of financial instruments
  • have disseminated false or misleading information.

Medical abuse

Military abuse

War crimes are "violations of the laws or customs of war", including "murder, the ill-treatment or deportation of civilian residents of an occupied territory to slave labor camps", "the murder or ill-treatment of prisoners of war", the killing of hostages, "the wanton destruction of cities, towns and villages, and any devastation not justified by military, or civilian necessity".

War rape is rape committed by soldiers, other combatants or civilians during armed conflict or war. During war and armed conflict rape is frequently used as means of psychological warfare to humiliate the enemy and undermine their morale.

Military sexual trauma is sexual assault and rape experienced by military personnel. It is often accompanied by posttraumatic stress disorder.

Mind abuse or mind control

Mind abuse or mind control refers to a process in which a group or individual "systematically uses unethically manipulative methods to persuade others to conform to the wishes of the manipulator(s), often to the detriment of the person being manipulated". The term has been applied to any tactic, psychological or otherwise, which can be seen as subverting an individual's sense of control over their own thinking, behaviour, emotions or decision making.

Misconduct

Misconduct means a wrongful, improper, or unlawful conduct motivated by premeditated or intentional purpose or by obstinate indifference to the consequences of one's acts. Three categories of misconduct are official misconduct, professional misconduct and sexual misconduct.

Mobbing

Mobbing means bullying of an individual by a group in any context. Identified as emotional abuse in the workplace (such as "ganging up" on someone by co-workers, subordinates or superiors) to force someone out of the workplace through rumour, innuendo, intimidation, humiliation, discrediting, and isolation, it is also referred to as malicious, nonsexual, nonracial, general harassment.

Mobbing can take place in any group environment such as a workplace, neighbourhood or family.

Narcissistic abuse

Narcissistic abuse is a term in popular psychology that refers to mentally abusive acts committed by those deemed to be narcissistic.

Neglect

Neglect is a passive form of abuse in which a caregiver responsible for providing care for a victim (a child, a physically or mentally disabled adult, an animal, a plant, or an inanimate object) fails to provide adequate care for the victim's needs, to the detriment of the victim. It is typically seen as a form of laziness or apathy on the form of the caregiver, rather than ignorance due to inability; accordingly, neglect of a child by and adult with mental disorders or who is overworked is not considered abuse, although this may constitute child neglect nonetheless.

Examples of neglect include failing to provide sufficient supervision, nourishment, medical care or other needs for which the victim is helpless to provide for themselves.

Negligence

Negligence is conduct that is culpable (to blame) because it falls short of what a reasonable person would do to protect another individual from foreseeable risks of harm.

Parental abuse by children

Abuse of parents by their children is a common but under-reported and under-researched subject. Parents are quite often subject to levels of childhood aggression, typically in the form of verbal or physical abuse, in excess of normal childhood aggressive outbursts. Parents feel a sense of shame and humiliation to have that problem, so they rarely seek help; nor is much help available today.

Passive–aggressive behaviour

Passive–aggressive behaviour is a form of covert abuse. It is passive, sometimes obstructionist resistance to following through with expectations in interpersonal or occupational situations. It can manifest itself as learned helplessness, procrastination, stubbornness, resentment, sullenness, or deliberate and repeated failures in accomplishing tasks for which one is (often explicitly) expected to do.

Patient abuse

Patient abuse or neglect is any action or failure to act which causes unreasonable suffering, misery or harm to the patient. It includes physically striking or sexually assaulting a patient. It also includes withholding of necessary food, physical care, and medical attention. It applies to various contexts such as hospitals, nursing homes, clinics and home visits.

Peer abuse

"Peer abuse" is an expression popularised by author Elizabeth Bennett in 2006 to reinforce the idea that it is as valid to identify bullying as a form of abuse just as one would identify any other form of abuse. The term conveys similar connotations to the term peer victimisation.

Persecution

Persecution is the systematic mistreatment of an individual or group by another group. The most common forms are religious persecution, ethnic persecution, and political persecution; though there is naturally some overlap between these terms.

Physical abuse

Physical abuse is abuse involving contact intended to cause feelings of intimidation, pain, injury, or other physical suffering or bodily harm.

Torture

Torture is any act by which severe pain, whether physical or psychological, is intentionally inflicted.

Police abuse

Police brutality is the intentional use of excessive force by a police officer. Though usually physical it has the potential to arise in the form of verbal attacks or psychological intimidation. It is in some instances triggered by "contempt of cop", i.e., perceived disrespect towards police officers.

Police corruption is a specific form of police misconduct designed to obtain financial benefits or career advancement for a police officer or officers in exchange for not pursuing, or selectively pursuing, an investigation or arrest.

Police misconduct refers to inappropriate actions taken by police officers in connection with their official duties. Police misconduct can lead to a miscarriage of justice and sometimes involves discrimination.

Political abuse

Prejudice

A prejudice is a preconceived belief, opinion, or judgment toward a group of people or a single person because of race, social class, gender, ethnicity, sexual orientation, age, disability, political beliefs, religion, line of work or other personal characteristics. It also means a priori beliefs (without knowledge of the facts) and includes "any unreasonable attitude that is unusually resistant to rational influence." Although positive and negative prejudice both exist, when used negatively, "prejudice" implies fear and antipathy toward such a group or person.

Prison abuse or prisoner abuse

Prisoner abuse is the mistreatment of persons while they are under arrest or incarcerated. Abuse falling into this category includes:

Professional abuse

Professional abusers:

Abuse may be:

Professional abuse always involves:

Further reading

  • Dorpat, Theodore L (1996). Gaslighting, the Double Whammy, Interrogation and Other Methods of Covert Control in Psychotherapy and Analysis. Jason Aronson, Incorporated.
  • Penfold, P. Susan (1998). Sexual Abuse by Health Professionals: A Personal Search for Meaning and Healing. University of Toronto Press.

Psychological abuse

Psychological abuse, also referred to as emotional abuse or mental abuse, is a form of abuse characterized by a person subjecting or exposing another to behavior that is psychologically harmful. Such abuse is often associated with situations of power imbalance, such as abusive relationships, bullying, child abuse and in the workplace.

Racial abuse

Racism is abusive attitudes or treatment of others based on the belief that race is a primary determinant of human traits and capacities. It is a form of pride that one's own race is superior and, as a result, has a right to "rule or dominate others", according to a Macquarie Dictionary definition. Racism is correlated with and can foster race-based prejudice, violence, dislike, discrimination, and oppression.

Ragging

Ragging is a form of abuse on newcomers to educational institutions in India, Sri Lanka, and Australia. It is similar to the American phenomenon known as hazing. Currently, Sri Lanka is said to be its worst affected country in the world.

Rape

Rape, a form of sexual assault, is an assault by a person involving sexual intercourse (with or without sexual penetration) of another without the other's consent (this includes those who are considered unable to consent, e.g., if they were inebriated or asleep)

The rate of reporting, prosecution and convictions for rape varies considerably in different jurisdictions. The US Bureau of Justice Statistics (1999) estimated that 91% of US rape victims are female and 9% are male, with 99% of the offenders being male. In one survey of women, only two percent of respondents who stated they were sexually assaulted said that the assault was perpetrated by a stranger. For men, male-male rape in prisons has been a significant problem.

Relational aggression

Relational aggression, also known as covert aggression or covert bullying is a type of aggression in which harm is caused through damage to relationships or social status within a group rather than physical violence. Relational aggression is more common and has been studied more among girls than boys.

Religious abuse

Religious abuse refers to:

Rudeness

Rudeness (also called impudence or effrontery) is the disrespect and failure to behave within the context of a society or a group of people's social laws or etiquette.

Satanic ritual abuse

Satanic ritual abuse (SRA, sometimes known as ritual abuse, ritualistic abuse, organised abuse, sadistic ritual abuse and other variants) was a moral panic that originated in the United States in the 1980s, spreading throughout the country and eventually to many parts of the world, before subsiding in the late 1990s.

School bullying

School bullying is a type of bullying that occurs in connection with education, either inside or outside of school. Bullying can be physical, verbal, or emotional and is usually repeated over a period of time.

Sectarian abuse

Self-abuse

Self-destructive behaviour is a broad set of extreme actions and emotions including self-harm and drug abuse. It can take a variety of forms, and may be undertaken for a variety of reasons. It tends to be most visible in young adults and adolescents, but may affect people of any age.

Sexual abuse

Sexual abuse is the forcing of undesired sexual behaviour by one person upon another, when that force falls short of being considered a sexual assault. The offender is referred to as a sexual abuser or – more pejoratively – molester. The term also covers any behaviour by any adult towards a child to stimulate either the adult or child sexually. When the victim is younger than the age of consent, it is referred to as child sexual abuse.

Sexual bullying

Sexual bullying is "any bullying behaviour, whether physical or non-physical, that is based on a person's sexuality or gender. It is when sexuality or gender is used as a weapon by boys or girls towards other boys or girls – although it is more commonly directed at girls. It can be carried out to a person's face, behind their back or through the use of technology."

Sibling abuse

Sibling abuse is the physical, emotional, or sexual abuse of one sibling by another.

It is estimated that as many as 3% of children are dangerously abusive towards a sibling, making sibling abuse more common than either child abuse by parents or spousal abuse.

Smear campaign

A "smear campaign", "smear tactic" or simply "smear" is a metaphor for activity that can harm an individual or group's reputation by conflation with a stigmatised group. Sometimes smear is used more generally to include any reputation-damaging activity, including such colloquialisms as mud slinging.

Spiritual abuse

Spiritual abuse occurs when a person in religious authority or a person with a unique spiritual practice misleads and maltreats another person in the name of God(s), religion, or in the mystery of any spiritual concept. Spiritual abuse often refers to an abuser using spiritual or religious rank in taking advantage of the victim's spirituality (mentality and passion on spiritual matters) by putting the victim in a state of unquestioning obedience to an abusive authority.

Stalking

Stalking is unwanted attention towards others by individuals (and sometimes groups of people). Stalking behaviours are related to harassment and intimidation. The word "stalking" is a term that has different meanings in different contexts in psychology and psychiatry; and some legal jurisdictions use it to refer to a certain type of criminal offence. It may also to refer to criminal offences or civil wrongs that include conduct which some people consider to be stalking, such as those described in law as "harassment" or similar terms.

Structural abuse

Structural abuse is sexual, emotional or physical abuse that is imposed on an individual or group by a social or cultural system or authority. Structural abuse is indirect, and exploits the victim on an emotional, mental or psychological level.

Substance use disorder

A substance use disorder is a patterned use of a drug in which the person consumes the substance in amounts or with methods which are harmful to themselves or others, and is a form of substance-related disorder. Widely differing definitions of substance use disorder are used in public health, medical and criminal justice contexts. In some cases criminal or anti-social behavior occurs when the person is under the influence of a drug, and long term personality changes in individuals may occur as well. In addition to possible physical, social, and psychological harm, use of some drugs may also lead to criminal penalties, although these vary widely depending on the local jurisdiction.

Surveillance abuse

Surveillance abuse is the use of surveillance methods or technology to monitor the activity of an individual or group of individuals in a way which violates the social norms or laws of a society. Mass surveillance by the state may constitute surveillance abuse if not appropriately regulated. Surveillance abuse often falls outside the scope of lawful interception. It is illegal because it violates peoples' right to privacy.

Taunting

A taunt is a battle cry, a method in hand-to-hand combat, sarcastic remark, or insult intended to demoralise the recipient, or to anger them and encourage reactionary behaviours without thinking. Taunting can exist as a form of social competition to gain control of the target's cultural capital (i.e. status). In sociological theory, the control of the three social capitals is used to produce an advantage in the social hierarchy as to enforce one's own position in relation to others. Taunting is committed by either directly bullying, or indirectly encouraging others to bully the target. It is also possible to give a response of the same kind, to ensure one's own status. It can be compared to fighting words and trash-talk.

Teacher abuse

Teasing

Teasing is a word with many meanings. In human interactions, teasing comes in two major forms, playful and hurtful. In mild cases, and especially when it is reciprocal, teasing can be viewed as playful and friendly. However, teasing is often unwelcome and then it takes the form of harassment. In extreme cases, teasing may escalate to actual violence, and may even result in abuse. Children are commonly teased on such matters as their appearance, weight, behaviour, abilities, and clothing. This kind of teasing is often hurtful, even when the teaser believes he or she is being playful. One may also tease an animal. Some animals, such as dogs and cats, may recognise this as play; but in humans, teasing can become hurtful and take the form of bullying and abuse.

Telephone abuse

Terrorism

Terrorism is the systematic use of terror especially as a means of coercion. At present, there is no internationally agreed definition of terrorism. Common definitions of terrorism refer only to those violent acts which are intended to create fear (terror), are perpetrated for an ideological goal (as opposed to a lone attack), and deliberately target or disregard the safety of non-combatants (e.g., neutral military personnel or civilians). It is sometimes sponsored by state policies when a country is not able to prove itself militarily to another enemy country.

Transgender abuse or trans bashing

Trans bashing is the act of victimising a person physically, sexually, or verbally because they are transgender or transsexual. Unlike gay bashing, it is committed because of the target's actual or perceived gender identity, not sexual orientation.

Umpire abuse

Umpire abuse refers to the act of abuse towards an umpire, referee, or other official in sport. The abuse can be verbal abuse (such as namecalling), or physical abuse (such as punching).

Verbal abuse or verbal attacks

Verbal abuse is a form of abusive behaviour involving the use of language. It is a form of profanity that can occur with or without the use of expletives. While oral communication is the most common form of verbal abuse, it also includes abusive words in written form.

Verbal abuse is a pattern of behaviour that can seriously interfere with one's positive emotional development and can lead to significant detriment to one's self-esteem, emotional well-being, and physical state. It has been further described as an ongoing emotional environment organised by the abuser for the purposes of control.

Whispering campaign

A whispering campaign is a method of persuasion in which damaging rumours or innuendo are spread about the target, while the source of the rumours seeks to avoid being detected while spreading them (for example, a political campaign might distribute anonymous flyers attacking the other candidate).

Workplace abuse or workplace bullying

Workplace bullying, like childhood bullying, is the tendency of individuals or groups to use persistent aggressive or unreasonable behaviour against a co-worker. Workplace bullying can include such tactics as verbal, nonverbal, psychological, physical abuse and humiliation. This type of aggression is particularly difficult because unlike the typical forms of school bullying, workplace bullies often operate within the established rules and policies of their organisation and their society. Bullying in the workplace is in the majority of cases reported as having been perpetrated by a manager and takes a wide variety of forms.

Characteristics and styles of abuse

   

Some important characteristics and styles of abuse are:

Abusive power and control

Abusive power and control (or controlling behaviour or coercive control) is the way that abusers gain and maintain power and control over a victim for an abusive purpose such as psychological, physical, sexual, or financial abuse. The abuse can be for various reasons such as personal gain, personal gratification, psychological projection, devaluation, envy, or just for the sake of it as the abuser may simply enjoy exercising power and control.

Controlling abusers may use multiple tactics to exert power and control over their victims. The tactics themselves are psychologically and sometimes physically abusive. Control may be helped through economic abuse thus limiting the victim's actions as they may then lack the necessary resources to resist the abuse. The goal of the abuser is to control and intimidate the victim or to influence them to feel that they do not have an equal voice in the relationship.

Manipulators and abusers control their victims with a range of tactics, including positive reinforcement (such as praise, superficial charm, flattery, ingratiation, love bombing, smiling, gifts, attention), negative reinforcement, intermittent or partial reinforcement, psychological punishment (such as nagging, silent treatment, swearing, threats, intimidation, emotional blackmail, guilt trips, inattention) and traumatic tactics (such as verbal abuse or explosive anger).

The vulnerabilities of the victim are exploited with those who are particularly vulnerable being most often selected as targets. Traumatic bonding can occur between the abuser and victim as the result of ongoing cycles of abuse in which the intermittent reinforcement of reward and punishment creates powerful emotional bonds that are resistant to change and a climate of fear. An attempt may be made to normalise, legitimise, rationalise, deny, or minimise the abusive behaviour, or blame the victim for it.

Isolation, gaslighting, mind games, lying, disinformation, propaganda, destabilisation, brainwashing and divide and rule are other strategies that are often used. The victim may be plied with alcohol or drugs or deprived of sleep to help disorientate them.

Certain personality types feel particularly compelled to control other people.

Psychological characteristics of abusers

   

In their review of data from the Dunedin Multidisciplinary Health and Development Study (a longitudinal birth cohort study; n = 941) Moffitt et al. report that while men exhibit more aggression overall, gender is not a reliable predictor of interpersonal aggression, including psychological aggression. The study found that whether male or female, aggressive people share a cluster of traits, including high rates of suspicion and jealousy; sudden and drastic mood swings; poor self-control; and higher than average rates of approval of violence and aggression. Moffitt et al. also argue that antisocial men exhibit two distinct types of interpersonal aggression (one against strangers, the other against intimate female partners), while they argue that antisocial women are rarely aggressive against anyone other than intimate male partners.

Male and female perpetrators of emotional and physical abuse exhibit high rates of personality disorders. Rates of personality disorder in the general population are roughly 15%–20%, while roughly 80% of abusive men in court-ordered treatment programmes have personality disorders. Female perpetrators have been found to possess personality disorders revolving around narcissistic and compulsive behaviors. Some reports on child maltreatment state that mothers use physical discipline on children more often than fathers, while severe injury and sexual abuse are more often perpetrated by men.

Abusers may aim to avoid household chores or exercise total control of family finances. Abusers can be very manipulative, often recruiting friends, law officers and court officials, even the victim's family to their side, while shifting blame to the victim.

Effects of abuse on victims

   

English et al. report that children whose families are characterised by interpersonal violence, including psychological aggression and verbal aggression, may exhibit a range of serious disorders, including chronic depression, anxiety, post-traumatic stress disorder, dissociation, and anger. Additionally, English et al. report that the impact of emotional abuse "did not differ significantly" from that of physical abuse. Johnson et al. report that, in a survey of female patients (n = 825), 24% suffered emotional abuse, and this group experienced higher rates of gynaecological problems. In their study of men emotionally abused by a wife/partner (n = 116), Hines and Malley-Morrison report that victims exhibit high rates of post-traumatic stress disorder and alcoholism.

Namie's study of workplace bullying found that 31% of women and 21% of men who reported workplace bullying exhibited three key symptoms of post-traumatic stress disorder (hypervigilance, intrusive imagery, and avoidance behaviours). A 1998 study of male college students (n = 70) by Simonelli & Ingram found that men who were emotionally abused by their female partners exhibited higher rates of chronic depression than the general population.

A study of college students (n = 80) by Goldsmith and Freyd report that many who have experienced emotional abuse do not characterise the mistreatment as abusive. Additionally, Goldsmith and Freyd show that these people also tend to exhibit higher than average rates of alexithymia (difficulty identifying and processing their own emotions).

Jacobson et al. found that women report markedly higher rates of fear during marital conflicts. However, a rejoinder argued that Jacobson's results were invalid due to men and women's drastically differing interpretations of questionnaires. Coker et al. found that the effects of mental abuse were similar whether the victim was male or female. Pimlott-Kubiak and Cortina found that severity and duration of abuse were the only accurate predictors of aftereffects of abuse; sex of perpetrator or victim were not reliable predictors.

Analysis of a large survey (n = 25,876) by LaRoche found that women abused by men were slightly more likely to seek psychological help than were men abused by women (63% vs. 62%).

In a 2007 study, Laurent, et al., report that psychological aggression in young couples (n = 47) is associated with decreased satisfaction for both partners: "psychological aggression may serve as an impediment to couples development because it reflects less mature coercive tactics and an inability to balance self/other needs effectively." A 2008 study by Walsh and Shulman reports that psychological aggression by females is more likely to be associated with relationship dissatisfaction for both partners, while withdrawal by men is more likely to be associated with relationship dissatisfaction for both partners.

Insider trading

From Wikipedia, the free encyclopedia

Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In many countries, some kinds of trading based on insider information are illegal. The rationale for this prohibition of insider trading differs between countries and regions. Some view it as unfair to other investors in the market who do not have access to the information, as the investor with inside information can potentially make larger profits than an investor without such information. However, insider trading is also prohibited to prevent the directors of a company (the insiders) from abusing a company's confidential information for the directors' personal gain.

The rules governing insider trading are complex and vary significantly from country to country, as does the extent of enforcement. The definition of 'insider' in one jurisdiction can be broad and may cover not only insiders themselves but also any persons related to them, such as brokers, associates, and even family members. In some jurisdictions, a person who becomes aware of non-public information and then trades on that basis may be guilty of a crime.

Trading by specific insiders, such as employees, is commonly permitted as long as it does not rely on material information not available to the general public. Many jurisdictions require that such trading be reported so the transactions can be monitored. In the United States and several other jurisdictions, trading conducted by corporate officers, key employees, directors, or significant shareholders must be reported to the regulator or publicly disclosed, usually within a few business days of the trade. In such cases, insiders in the United States are required to file Form 4 with the U.S. Securities and Exchange Commission (SEC) when buying or selling shares of their own companies. The authors of one study concluded that illegal insider trading raises the cost of capital for securities issuers, thus decreasing overall economic growth. On the other hand, some economists, such as Henry Manne, have argued that insider trading should be allowed and can, in fact, benefit markets.

There has long been "considerable academic debate" among business and legal scholars over whether insider trading should be illegal. Several arguments against outlawing insider trading have been identified: for example, although insider trading is illegal, most insider trading is never detected by law enforcement, and thus the illegality of insider trading might give the public the potentially misleading impression that "stock market trading is an unrigged game that anyone can play." Some legal analysis has questioned whether insider trading actually harms anyone in the legal sense, since it can be argued either that insider trading does not cause anyone to suffer an actual "loss" or that anyone who suffers a loss is not owed an actual legal duty by the insiders in question. Opponents of political insider trading also point to conflicts of interest and social distrust.

Rules prohibiting or criminalizing insider trading on material non-public information exist in most jurisdictions around the world (Bhattacharya and Daouk, 2002), but the details and the efforts to enforce them vary considerably. In the United States, Sections 16(b) and 10(b) of the Securities Exchange Act of 1934 directly and indirectly address insider trading. The U.S. Congress enacted this law after the stock market crash of 1929. While the United States is generally viewed as making the most serious efforts to enforce its insider trading laws, the broader scope of the European model legislation provides a stricter framework against illegal insider trading. In the European Union and the United Kingdom, all trading on non-public information is, under the rubric of market abuse, subject at a minimum to civil penalties and possible criminal penalties as well. UK's Financial Conduct Authority has the responsibility to investigate and prosecute insider dealing, defined by the Criminal Justice Act 1993.

Financial Action Task Force on Money Laundering (FATF) can apply to domestic politically exposed persons.

Definition of "insider"

In the United States, Canada, Australia, Germany and Romania for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors and any beneficial owners of more than 10% of a class of the company's equity securities. Trades made by these types of insiders in the company's own stock, based on material non-public information, are considered fraudulent since the insiders are violating the fiduciary duty that they owe to the shareholders. The corporate insider, simply by accepting employment, has undertaken a legal obligation to the shareholders to put the shareholders' interests before their own, in matters related to the corporation. When insiders buy or sell based on company-owned information, they are said to be violating their obligation to the shareholders or investors.

For example, illegal insider trading would occur if the chief executive officer of Company A learned (prior to a public announcement) that Company A would be taken over and then bought shares in Company A while knowing that the share price would likely rise. In the United States and many other jurisdictions, "insiders" are not just limited to corporate officials and major shareholders where illegal insider trading is concerned but can include any individual who trades shares based on material non-public information in violation of some duty of trust. This duty may be imputed; for example, in many jurisdictions, in cases where a corporate insider "tips" a friend about non-public information likely to have an effect on the company's share price, the duty the corporate insider owes the company is now imputed to the friend and the friend violates a duty to the company if he trades on the basis of this information.

Liability

Liability for inside trading violations generally cannot be avoided by passing on the information in an "I scratch your back; you scratch mine" or quid pro quo arrangement if the person receiving the information knew or should have known that the information was material non-public information. In the United States, at least one court has indicated that the insider who releases the non-public information must have done so for an improper purpose. In the case of a person who receives the insider information (called the "tippee"), the tippee must also have been aware that the insider released the information for an improper purpose.

One commentator has argued that if Company A's CEO did not trade on undisclosed takeover news, but instead passed the information on to his brother-in-law who traded on it, illegal insider trading would still have occurred (albeit by proxy, by passing it on to a "non-insider" so Company A's CEO would not get his hands dirty).

Misappropriation theory

The misappropriation theory of insider trading is now accepted in U.S. law. It states that anyone who misappropriates material non-public information and trades on that information in any stock may be guilty of insider trading. This can include elucidating material non-public information from an insider with the intention of trading on it or passing it on to someone who will. This theory constitutes the background for the securities regulation that enforces the insider trading. Disgorgement represents ill-gotten gains (or losses avoided) resulting from individuals violating the securities laws. In general in the countries where the insider trading is forbidden, the competent Authority seeks disgorgement to ensure that securities law violators do not profit from their illegal activity. When appropriate, the disgorged funds are returned to the injured investors. Disgorgements can be ordered in either administrative proceedings or civil actions, and the cases can be settled or litigated. Payment of disgorgement can be either completely or partially waived based on the defendant demonstrating an inability to pay. In settled administrative proceedings, Enforcement may recommend, if appropriate, that the disgorgement be waived. There are several approaches in order to quantify the disgorgement; an innovative procedure based on probability theory was defined by Marcello Minenna by directly analyzing the time periods of the involved transactions in the insider trading.

Proof of responsibility

Proving that someone has been responsible for a trade can be difficult because traders may try to hide behind nominees, offshore companies, and other proxies. The SEC prosecutes over 50 cases each year, with many being settled administratively out of court. The SEC and several stock exchanges actively monitor trading, looking for suspicious activity. The SEC does not have criminal enforcement authority but can refer serious matters to the U.S. Attorney's Office for further investigation and prosecution.

Trading on information in general

In the United States and most non-European jurisdictions, not all trading on non-public information is illegal insider trading. For example, a person in a restaurant who hears the CEO of Company A at the next table tell the CFO that the company's profits will be higher than expected and then buys the stock is not guilty of insider trading—unless he or she had some closer connection to the company or company officers. However, even where the tippee is not himself an insider, where the tippee knows that the information is non-public and the information is paid for, or the tipper receives a benefit for giving it, then in the broader-scope jurisdictions the subsequent trading is illegal.

Notwithstanding, information about a tender offer (usually regarding a merger or acquisition) is held to a higher standard. If this type of information is obtained (directly or indirectly) and there is reason to believe it is nonpublic, there is a duty to disclose it or abstain from trading.

In the United States in addition to civil penalties, the trader may also be subject to criminal prosecution for fraud or where SEC regulations have been broken, the U.S. Department of Justice (DOJ) may be called to conduct an independent parallel investigation. If the DOJ finds criminal wrongdoing, the department may file criminal charges.

Commercialisation

The advent of the Internet has provided a forum for the commercialisation of trading on insider information. In 2016 a number of dark web sites were identified as marketplaces where such non-public information was bought and sold. At least one such site used bitcoin to avoid currency restrictions and to impede tracking. Such sites also provide a place for soliciting for corporate informants, where non-public information may be used for purposes other than stock trading.

Arguments for further prohibition

A study of political insider trading found existing regulation including STOCK Act results in conflict of interest and contributes to social distrustInformation asymmetry enjoyed by politicians was found to be high, which does not confirm the predictions of social contract theory. Political insider trading by persons which are not required to report according to STOCK Act was found. Higher insider trading was found when legislature is in session and in periods with higher geopolitical risk.

Legal trades by insiders are common, as employees of publicly traded corporations often have stock or stock options. These trades are made public in the United States through SEC filings that are also being made available by academic researchers as structured datasets.

U.S. SEC Rule 10b5-1 clarified that the prohibition against insider trading does not require proof that an insider actually used material nonpublic information when conducting a trade; possession of such information alone is sufficient to violate the provision, and the SEC would infer that an insider in possession of material nonpublic information used this information when conducting a trade. However, SEC Rule 10b5-1 also created for insiders an affirmative defense if the insider can demonstrate that the trades conducted on behalf of the insider were conducted as part of a pre-existing contract or written binding plan for trading in the future.

For example, if an insider expects to retire after a specific period of time and, as part of retirement planning, the insider has adopted a written binding plan to sell a specific amount of the company's stock every month for two years, and the insider later comes into possession of material nonpublic information about the company, trades based on the original plan might not constitute prohibited insider trading.

There are very limited laws against "insider trading" in the commodities markets if, for no other reason than that the concept of an "insider" is not immediately analogous to commodities themselves (corn, wheat, steel, etc.). However, analogous activities such as front running are illegal under US commodity and futures trading laws. For example, a commodity broker can be charged with fraud for receiving a large purchase order from a client (one likely to affect the price of that commodity) and then purchasing that commodity before executing the client's order to benefit from the anticipated price increase.

Arguments for legalizing

Some economists and legal scholars (such as Henry Manne, Milton Friedman, Thomas Sowell, Daniel Fischel, and Frank H. Easterbrook) have argued that laws against insider trading should be repealed. They claim that insider trading based on material nonpublic information benefits investors, in general, by more quickly introducing new information into the market.

Friedman, laureate of the Nobel Memorial Prize in Economics, said: "You want more insider trading, not less. You want to give the people most likely to have knowledge about deficiencies of the company an incentive to make the public aware of that." Friedman did not believe that the trader should be required to make his trade known to the public, because the buying or selling pressure itself is information for the market.

Others argue that insider trading is a victimless act: a willing buyer and a willing seller agree to trade property that the seller rightfully owns, with no prior contract (according to this view) having been made between the parties to refrain from trading if there is asymmetric information. The Atlantic has described the process as "arguably the closest thing that modern finance has to a victimless crime".

Legalization advocates also question why "trading" where one party has more information than the other is legal in other markets, such as real estate, but not in the stock market. For example, if a geologist knows there is a high likelihood of the discovery of petroleum under Farmer Smith's land, he may be entitled to make Smith an offer for the land, and buy it, without first telling Farmer Smith of the geological data.

Advocates of legalization make free speech arguments. Punishment for communicating about a development pertinent to the next day's stock price might seem an act of censorship.

Some authors have used these arguments to propose legalizing insider trading on negative information (but not on positive information). Since negative information is often withheld from the market, trading on such information has a higher value for the market than trading on positive information.

The US and the UK differ in the way the law is interpreted and applied with regard to insider trading. In the UK, the relevant laws are the Criminal Justice Act 1993, Part V, Schedule 1; the Financial Services and Markets Act 2000, which defines an offence of "market abuse"; and the European Union Regulation No 596/2014. The principle is that it is illegal to trade on the basis of market-sensitive information that is not generally known. This is a much broader scope than under U.S. law. The key differences from U.S. law are that no relationship to either the issuer of the security or the tipster is required; all that is required is that the guilty party traded (or caused trading) whilst having inside information, and there is no scienter requirement under UK law.

Japan enacted its first law against insider trading in 1988. Roderick Seeman said, "Even today many Japanese do not understand why this is illegal. Indeed, previously it was regarded as common sense to make a profit from your knowledge."

In Malta the law follows the European broader scope model. The relevant statute is the Prevention of Financial Markets Abuse Act of 2005, as amended. Earlier acts included the Financial Markets Abuse Act in 2002, and the Insider Dealing and Market Abuse Act of 1994.

The International Organization of Securities Commissions (IOSCO) paper on the "Objectives and Principles of Securities Regulation" (updated to 2003) states that the three objectives of good securities market regulation are investor protection, ensuring that markets are fair, efficient and transparent, and reducing systemic risk.

The discussion of these "Core Principles" state that "investor protection" in this context means "Investors should be protected from misleading, manipulative or fraudulent practices, including insider trading, front running or trading ahead of customers and the misuse of client assets." More than 85 percent of the world's securities and commodities market regulators are members of IOSCO and have signed on to these Core Principles.

The World Bank and International Monetary Fund now use the IOSCO Core Principles in reviewing the financial health of different country's regulatory systems as part of these organization's financial sector assessment program, so laws against insider trading based on non-public information are now expected by the international community. Enforcement of insider trading laws varies widely from country to country, but the vast majority of jurisdictions now outlaw the practice, at least in principle.

Larry Harris claims that differences in the effectiveness with which countries restrict insider trading help to explain the differences in executive compensation among those countries. The US, for example, has much higher CEO salaries than have Japan or Germany, where insider trading is less effectively restrained.

By nation

Australia

The current Australian legislation arose out of the report of a 1989 parliamentary committee report which recommended removal of the requirement that the trader be 'connected' with the body corporate. This may have weakened the importance of the fiduciary duty rationale and possibly brought new potential offenders within its ambit. In Australia if a person possesses inside information and knows, or ought reasonably to know, that the information is not generally available and is materially price sensitive then the insider must not trade. Nor must she or he procure another to trade and must not tip another. Information will be considered generally available if it consists of readily observable matter or it has been made known to common investors and a reasonable period for it to be disseminated among such investors has elapsed.

Brazil

The practice of insider trading is an illegal act under Brazilian law, since it constitutes unfair behavior that threatens the security and equality of legal conditions in the market. Since 2001, the practice is also considered a crime. Law 6,385/1976, as amended by Law 10,303/2001, provided for Article 27-D, which typifies the conduct of "Using relevant information not yet disclosed to the market, of which he is aware and from which he must maintain secrecy, capable of providing, for himself or for others, undue advantage, through trading, on his own behalf or on behalf of a third party, with securities: Penalty - imprisonment, from 1 (one) to 5 (five) years, and a fine of up to 3 (three) times the amount of the illicit advantage obtained as a result of the crime."

The first conviction handed down in Brazil for the practice of the offense of "misuse of privileged information" occurred in 2011, by federal judge Marcelo Costenaro Cavali, of the Sixth Criminal Court of São Paulo. It is the case of the Sadia-Perdigão merger. The former Director of Finance and Investor Relations, Luiz Gonzaga Murat Júnior, was sentenced to one year and nine months in prison in an open regime, replaceable by community service, and the inability to exercise the position of administrator or fiscal councilor of a publicly traded company for the time he serves his sentence, in addition to a fine of R$349,711.53. The then member of the board of directors Romano Ancelmo Fontana Filho was sentenced to prison for one year and five months in an open regime, also replaceable by community service, in addition to not being able to exercise the position of administrator or fiscal councilor of a publicly held company. He was also fined R$374,940.52.

Canada

In 2008, police uncovered an insider trading conspiracy involving Bay Street and Wall Street lawyer Gil Cornblum who had worked at Sullivan & Cromwell and was working at Dorsey & Whitney, and a former lawyer, Stan Grmovsek, who were found to have gained over $10 million in illegal profits over a 14-year span. Cornblum committed suicide by jumping from a bridge as he was under investigation and shortly before he was to be arrested but before criminal charges were laid against him, one day before his alleged co-conspirator Grmovsek pled guilty. Grmovsek pleaded guilty to insider trading and was sentenced to 39 months in prison. This was the longest term ever imposed for insider trading in Canada. These crimes were explored in Mark Coakley's 2011 non-fiction book, Tip and Trade.

China

The majority of shares in China before 2005 were non-tradeable shares that were not sold on the stock exchange publicly but privately. To make shares more accessible, the China Securities Regulation Commission (CSRC) required the companies to convert the non-tradeable shares into tradeable shares. There was a deadline for companies to convert their shares and the deadline was short, and due to this there was a large amount of exchanges, and many of these were conducted based on critical inside information. At the time, insider trading did not lead to prison time. Generally, punishment may include monetary fees or temporary relieving from a position in the company, but prison time is rare. However, in 2015, the Chinese fund manager Xu Xiang was arrested for insider trading, and in 2017, he was sentenced to five and a half years in prison and fined 11 billion yuan.

European Union

In 2014, the European Union (EU) adopted legislation (Criminal Sanctions for Market Abuse Directive) that harmonised criminal sanctions for insider dealing. All EU Member States agreed to introduce maximum prison sentences of at least four years for serious cases of market manipulation and insider dealing, and at least two years for improper disclosure of insider information.

India

Insider trading in India is an offense according to Sections 12A and 15G of the Securities and Exchange Board of India Act, 1992, and the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015. Insider trading is when one with access to non-public, price-sensitive information about the securities of the company subscribes, buys, sells, or deals, or agrees to do so or counsels another to do so as principal or agent. Price-sensitive information is information that materially affects the value of the securities. The penalty for insider trading is imprisonment, which may extend to five years, and a minimum of five lakh rupees (500,000) to 25 crore rupees (250 million) or three times the profit made, whichever is higher.

The Wall Street Journal, in a 2014 article entitled "Why It's Hard to Catch India's Insider Trading", said that despite a widespread belief that insider trading takes place on a regular basis in India, there were few examples of insider traders being prosecuted in India. One former top regulator said that in India insider trading is deeply rooted and especially rampant because regulators do not have the tools to address it. In the few cases where prosecution has taken place, cases have sometimes taken more than a decade to reach trial, and punishments have been light; and despite SEBI by law having the ability to demand penalties of up to $4 million, the few fines that were levied for insider trading have usually been under $200,000.

Kuwait

The U.S. SEC alleged that in 2009 Kuwaiti trader Hazem Al-Braikan engaged in insider trading after misleading the public about possible takeover bids for two companies. Three days after Al-Braikan was sued by the SEC, he was found dead of a gunshot wound to the head in his home in Kuwait City on July 26, 2009, in what Kuwaiti police called a suicide. The SEC later reached a $6.5 million settlement of civil insider trading charges, with his estate and others.

Norway

In 2009, a journalist in Nettavisen (Thomas Gulbrandsen) was sentenced to four months in prison for insider trading.

The longest prison sentence in a Norwegian trial where the main charge was insider trading, was for eight years (two suspended) when Alain Angelil was convicted in a district court on December 9, 2011.

Philippines

Under Republic Act 8799 or the Securities Regulation Code, insider trading in the Philippines is illegal.

United Kingdom

Although insider trading in the UK has been illegal since 1980, it proved difficult to successfully prosecute individuals accused of insider trading. There were a number of notorious cases where individuals were able to escape prosecution. Instead the UK regulators relied on a series of fines to punish market abuses.

These fines were widely perceived as an ineffective deterrent, and there was a statement of intent by the UK regulator (the Financial Services Authority) to use its powers to enforce the legislation (specifically the Financial Services and Markets Act 2000). Between 2009 and 2012 the FSA secured 14 convictions in relation to insider dealing.

United States

United States law

Until the 21st century and the European Union's market abuse laws, the United States was the leading country to prohibit insider trading on the basis of material non-public information. Thomas Newkirk and Melissa Robertson of the SEC summarize the development of US insider trading laws. Insider trading has a base offense level of 8, which puts it in Zone A under the U.S. Sentencing Guidelines. This means that first-time offenders are eligible to receive probation rather than incarceration.

Statutory

U.S. insider trading prohibitions are based on English and American common law prohibitions against fraud. In 1909, well before the Securities Exchange Act was passed, the United States Supreme Court ruled that a corporate director who bought that company's stock when he knew the stock's price was about to increase committed fraud by buying but not disclosing his inside information.

Section 15 of the Securities Act of 1933 contained prohibitions of fraud in the sale of securities, which were greatly strengthened by the Securities Exchange Act of 1934.

Section 16(b) of the Securities Exchange Act of 1934 prohibits short-swing profits (from any purchases and sales within any six-month period) made by corporate directors, officers, or stockholders owning more than 10% of a firm's shares. Under Section 10(b) of the 1934 Act, SEC Rule 10b-5, prohibits fraud related to securities trading.

The Insider Trading Sanctions Act of 1984 and the Insider Trading and Securities Fraud Enforcement Act of 1988 place penalties for illegal insider trading as high as three times the amount of profit gained or loss avoided through illegal trading.

SEC regulations

SEC regulation FD ("Fair Disclosure") requires that if a company intentionally discloses material, non-public information to one person, it must simultaneously disclose that information to the public at large. In the case of unintentional disclosure of material, non-public information to one person, the company must make a public disclosure "promptly".

Insider trading and similar practices are also regulated by the SEC under its rules on takeovers and tender offers under the Williams Act.

Court decisions

Much of the development of insider trading law has occurred through or resulted from court decisions.

In 1909, the Supreme Court of the United States ruled in Strong v. Repide that a director who expects to act in a way that affects the value of shares cannot use knowledge of that expectation to acquire shares from those who do not know of the expected action. Even though in general, ordinary relations between directors and shareholders in a business corporation are not of such a fiduciary nature as to make it the duty of a director to disclose to a shareholder general knowledge regarding the value of the shares of the company before he purchases any from a shareholder, some cases involve special facts that impose such duty.

In 1968, the Second Circuit Court of Appeals advanced a "level playing field" theory of insider trading in SEC v. Texas Gulf Sulphur Co. The court stated that anyone in possession of inside information must either disclose the information or refrain from trading. Officers of the Texas Gulf Sulphur Company had used inside information about the discovery of the Kidd Mine to make profits by buying shares and call options on company stock.

In 1984, the Supreme Court ruled in Dirks v. Securities and Exchange Commission that tippees (recipients of second-hand information) are liable for insider trading if they had reason to believe that the tipper had breached a fiduciary duty in disclosing confidential information. One such example would be if the tipper received any personal benefit from the disclosure, thereby breaching his or her duty of loyalty to the company. In Dirks, the "tippee" had received confidential information from an insider, a former employee of a company. The reason the insider had disclosed the information to the tippee, and the reason the tippee had disclosed the information to third parties, was to blow the whistle on fraud at the company. As a result of the tippee's efforts the fraud was uncovered and the company went into bankruptcy. But, while the tippee had given the "inside" information to clients who made profits from the information, the Supreme Court ruled that the tippee could not be held liable under the federal securities laws because the insider from whom he received the information had not released the information for an improper purpose (a personal benefit) but rather for the purpose of exposing the fraud. The court ruled that the tippee could not have been aiding and abetting a securities law violation committed by the insider because no securities law violation had been committed by the insider.

In 2019 the U.S. Court of Appeals for the Second Circuit ruled in United States v. Blaszczak that the "personal-benefit" test announced in Dirks does not apply to Title 18 fraud statutes, such as 18 USC 1348. In Dirks, the court also defined the concept of "constructive insiders" as lawyers, investment bankers, and others who receive confidential information from a corporation while providing services to the corporation. The court held that constructive insiders are also liable for insider trading violations if the corporation expects the information revealed to them to remain confidential, since they acquire the fiduciary duties of a true insider.

The next expansion of insider trading liability came in SEC vs. Materia, 745 F.2d 197 (2d Cir. 1984), the case that first introduced the misappropriation theory of liability for insider trading. Materia, a financial printing firm proofreader who clearly was not an insider by any definition, was found to have determined the identity of takeover targets based on proofreading tender offer documents in the course of his employment. After a two-week trial, the district court found him liable for insider trading, and the Second Circuit Court of Appeals affirmed, holding that the theft of information from an employer, and the use of that information to purchase or sell securities in another entity, constituted a fraud in connection with the purchase or sale of a securities. The misappropriation theory of insider trading was born, and liability was thereby further expanded to encompass a larger group of outsiders.

In United States v. Carpenter (1986), the Supreme Court cited an earlier ruling while unanimously upholding mail and wire fraud convictions for a defendant who had received his information from a journalist rather than from the company itself. The journalist R. Foster Winans was also convicted, on the grounds that he had misappropriated information belonging to his employer, The Wall Street Journal. In the widely publicized case, Winans had traded in advance of "Heard on the Street" columns appearing in the Journal.

The Court stated in Carpenter: "It is well established, as a general proposition, that a person who acquires special knowledge or information by virtue of a confidential or fiduciary relationship with another is not free to exploit that knowledge or information for his own personal benefit but must account to his principal for any profits derived therefrom." However, in upholding the securities fraud (insider trading) convictions the justices were evenly split.

In 1997, the U.S. Supreme Court adopted the misappropriation theory of insider trading in United States v. O'Hagan, 521 U.S. 642, 655 (1997). O'Hagan was a partner in a law firm representing Grand Metropolitan while it was considering a tender offer for Pillsbury Company. O'Hagan used this inside information by buying call options on Pillsbury stock, thereby realizing profits of over $4.3 million. O'Hagan argued that neither he nor his firm had owed a fiduciary duty to Pillsbury, so he had not committed fraud by purchasing Pillsbury options. The Court rejected O'Hagan's arguments and upheld his conviction.

The "misappropriation theory" holds that a person commits fraud "in connection with" a securities transaction, and thereby violates 10(b) and Rule 10b-5, when he misappropriates confidential information for securities trading purposes in breach of a duty owed to the source of the information. Under this theory, a fiduciary's undisclosed, self-serving use of a principal's information to purchase or sell securities, in breach of a duty of loyalty and confidentiality, defrauds the principal of the exclusive use of the information. In lieu of premising liability on a fiduciary relationship between a company insider and the purchaser or seller of the company's stock, the misappropriation theory premises liability on a fiduciary-turned-trader's deception of those who entrusted him with access to confidential information.

The Court specifically recognized that a corporation's information is its property: "A company's confidential information ... qualifies as property to which the company has a right of exclusive use. The undisclosed misappropriation of such information in violation of a fiduciary duty ... constitutes fraud akin to embezzlement – the fraudulent appropriation to one's own use of the money or goods entrusted to one's care by another."

In 2000, the SEC enacted SEC Rule 10b5-1, which defined trading "on the basis of" inside information as trades that occur while the trader is aware of material nonpublic information. It is no longer a defense for one to say that one would have made the trade anyway. However, the rule also codified an affirmative defense for pre-planned trades.

In Morgan Stanley v. Skowron, 989 F. Supp. 2d 356 (S.D.N.Y. 2013), applying New York's faithless servant doctrine, the court held that a hedge fund's portfolio manager who had engaged in insider trading in violation of his company's code of conduct, which also required him to report that misconduct, was required to repay his employer the full $31 million his employer had paid him as compensation during his period of faithlessness. The court called the insider trading the "ultimate abuse of a portfolio manager's position". The judge also wrote: "In addition to exposing Morgan Stanley to government investigations and direct financial losses, Skowron's behavior damaged the firm's reputation, a valuable corporate asset."

In 2014, in United States v. Newman, the United States Court of Appeals for the Second Circuit cited the Supreme Court's decision in Dirks and ruled that for a "tippee" (a person who used information they received from an insider) to be guilty of insider trading, the tippee must have been aware not only that the information was insider information, but must also that the insider had released the information for an improper purpose (such as a personal benefit). The Court concluded that an insider's breach of a fiduciary duty not to release confidential information, in the absence of an improper purpose on the part of the insider, is not enough to impose criminal liability on either the insider or the tippee.

In 2016, in Salman v. United States, the U.S. Supreme Court held that the benefit a tipper must receive as the predicate for an insider-trader prosecution of a tippee need not be pecuniary, and that giving a 'gift' of a tip to a family member is presumptively an act for the personal, albeit intangible, benefit of the tipper.

By members of Congress

Members of the US Congress are not exempt from the laws that ban insider trading. Because they generally do not have a confidential relationship with the source of the information they receive, however, they do not meet the usual definition of an "insider". House of Representatives rules may, however, provide that congressional insider trading is unethical. A 2004 study found that stock sales and purchases by senators outperformed the market by 12.3% per year. Peter Schweizer points out several examples of insider trading by members of Congress, including action taken by Spencer Bachus following a private, behind-the-doors meeting on the evening of September 18, 2008 wherein Hank Paulson and Ben Bernanke informed members of Congress about the issues due to the 2008 financial crisis; Bachus shorted stocks the next morning and cashed in his profits within a week. Also attending the same meeting were Senator Dick Durbin and House Speaker John Boehner; the same day (effective the following day), Durbin sold mutual-fund shares worth $42,696 and reinvested it all with Warren Buffett. Also the same day (effective the following day), Boehner cashed out of an equity mutual fund.

In May 2007, a bill entitled the Stop Trading on Congressional Knowledge Act, or STOCK Act was introduced to hold congressional and federal employees liable for stock trades they made using information they gained through their jobs and also regulate analysts or political intelligence firms that research government activities. The STOCK Act was enacted on April 4, 2012. In the approximately nine month period ending September 2021, Senate and House members disclosed 4,000 trades of stocks and bonds, worth at least $315 million.

2020 congressional insider trading scandal
The 2020 congressional insider trading scandal was a political scandal in the United States involving allegations that several members of the United States Senate violated the STOCK Act by selling stock at the start of the COVID-19 pandemic in the United States and just before a stock market crash on February 20, 2020, using knowledge given to them at a closed Senate meeting. The Department of Justice (DOJ) initiated a probe into the stock transactions on March 30, 2020. No charges were brought against anyone and all investigations into the matter are closed.

Further

Anil Kumar, a senior partner at management consulting firm McKinsey & Company, pleaded guilty in 2010 to insider trading in a "descent from the pinnacle of the business world".

Chip Skowron, a hedge fund co-portfolio manager of FrontPoint Partners LLC's health care funds, was convicted of insider trading in 2011, for which he served five years in prison. He had been tipped off by a consultant to a company that the company was about to make a negative announcement regarding its clinical trial for a drug. Skowron initially denied the charges against him and his defense attorney said he would plead not guilty, saying "We look forward to responding to the allegations more fully in court at the appropriate time". However, after the consultant charged with tipping him off pleaded guilty, he changed his position, and admitted his guilt.

Rajat Gupta, who had been managing partner of McKinsey & Co. and a director at Goldman Sachs Group Inc. and Procter & Gamble Co., was convicted by a federal jury in 2012 and sentence to two years in prison for leaking inside information to hedge fund manager Raj Rajaratnam who was sentenced to 11 years in prison. The case was prosecuted by the office of United States Attorney for the Southern District of New York Preet Bharara.

Mathew Martoma, former hedge fund trader and portfolio manager at S.A.C. Capital Advisors, was accused of generating possibly the largest single insider trading transaction profit in history at a value of $276 million. He was convicted in February 2014, and is serving a nine-year prison sentence.

With the guilty plea by Perkins Hixon in 2014 for insider trading from 2010 to 2013 while at Evercore Partners, Bharara said in a press release that 250 defendants whom his office had charged since August 2009 had now been convicted.

On December 10, 2014, a federal appeals court overturned the insider trading convictions of two former hedge fund traders, Todd Newman and Anthony Chiasson, based on "erroneous" instructions given to jurors by the trial judge. The decision was expected to affect the appeal of the separate insider-trading conviction of former SAC Capital portfolio manager Michael Steinberg and the U.S. Attorney and the SEC in 2015 did drop their cases against Steinberg and others.

In 2016, Sean Stewart, a former managing director at Perella Weinberg Partners LP and vice president at JPMorgan Chase, was convicted on allegations he tipped his father on pending health-care deals. The father, Robert Stewart, previously had pleaded guilty but did not testify during his son's trial. It was argued that by way of compensation for the tip, the father had paid more than $10,000 for Sean's wedding photographer.

In 2017, Billy Walters, a Las Vegas sports bettor, was convicted of making $40 million on private information about Dallas-based dairy processing company Dean Foods, and sentenced to five years in prison. Walters's source, company director Thomas C. Davis, employing a prepaid cell phone and sometimes the code words "Dallas Cowboys" for Dean Foods, helping Walters to realize profits and avoid losses in the stock from 2008 to 2014, the federal jury found. Golfer Phil Mickelson "was also mentioned during the trial as someone who had traded in Dean Foods shares and once owed nearly $2 million in gambling debts to" Walters. Mickelson "made roughly $1 million trading Dean Foods shares; he agreed to forfeit those profits in a related civil case brought by the Securities and Exchange Commission". Walters appealed the verdict, but in December 2018 his conviction was upheld by the 2nd Circuit Court of Appeals.

In 2018, David Blaszczak, the "king of political intelligence"; Theodore Huber and Robert Olan, two partners at hedge fund Deerfield Management; and Christopher Worrall, an employee at the Centers for Medicare and Medicaid Services (CMS), were convicted for insider trading by the U.S. Attorney's Office in the Southern District of New York. Worrall leaked confidential government information that he stole from CMS to Blaszczak, and Blaszczak passed that information to Huber and Olan, who made $7 million trading securities. The convictions were upheld in 2019 by the Second Circuit Court of Appeals; that court's opinion was vacated by the Supreme Court in 2021 and the Second Circuit is now reconsidering its decision.

In 2023, Terren Peizer was charged with insider trading by the SEC, which alleged that he sold $20 million of Ontrak Inc. stock while he was in possession of material nonpublic negative information. Peizer was the CEO and chairman of Ontrak. In addition, the U.S. Department of Justice announced criminal charges of securities fraud against Peizer, charging that thereby he had avoided $12 million in losses; he was arrested. The case was tried in the U.S. District Court for the Central District of California. He was convicted of all three charges in June 2024, and faces up to 65 years in prison.

Ecological effects of biodiversity

From Wikipedia, the free encyclopedia https://en.wikipedia.org/wiki/Eco...