The financial institutions have long been lucrative targets for insider attacks, but with the computerization of systems, attacks can now be launched on a grander scale than ever before. Insider attacks on firms’ electronic systems can result in financial and intellectual property theft, damaged or destroyed assets, and firm-wide disruption to internal systems and customer operations. Preventing and detecting attacks, however, has proven to be difficult, as insiders are often able to capitalize on their familiarity with firm’s systems to launch attacks without attracting notice.
The objective of insider trading laws and regulations is to assure that no one would gain by trading on ' insider ' or ' unpublished ' information - information that is not available to all market participants.
The ultimate goal is to create a level playing field by making information accessible to all market participants.
By automating the prohibition of insider trading, we have found that there is greater efficiency in compliance monitoring of insider regulations.
The organization should adopt a "Chinese Wall" policy which separates “ inside areas ” from “ public areas ” for preventing the misuse of confidential information. The “ inside areas ” are defined as those areas of the organization which routinely have access to confidential information and “ public areas ” are defined as those areas which deal with sales, marketing, investment advice or other departments providing support services. The following measures to be adopted by organizations for separating “ inside areas ” from “ public areas ”.
To summarise, even after an organization has automated their processes to prohibit insider trading, it still remains a continuous challenge to secure information from both inside & outside that an organization has to continuously improve upon.
We at Infomatics have been partners to medium-to-large enterprises in the Financial Services business for their automations by implementing cost effective prohibition of insider trading solutions. To get more insights, do read our detailed case studies published on our website, Click here
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