Integrating a Systems Approach to Detect Risk of Insider Trading

Corporations have repeated reported incidents of misuse of material non-public information for illegal insider trading. Though information technologies are being inappropriately used to assist in these activities, creatively using emerging technologies and business process can also aid in preventing and detecting insider trading. This paper first discusses the issues relating to insider trading in the business environment. Next, policy and preventive measures are discussed, along with a novel model which defines a notion of Insider Information Risk value, and presents a framework for using the Systems Development Life Cycle (SDLC) approach to monitor and deter misuse of private corporate knowledge.