Question

This article published in the Wall Street Journal on January 15, 2019 is about charges in SEC hack reveal security gaps. The U.S. Securities and Exchange Commission's computer network and Electronic Data Gathering and Retrieval (EDGAR) database were hacked in 2016. Details of the methods used to hack the system, and the profits gleaned from the alleged illegal trading based on insider information illicitly obtained, are now coming to light as charges are being filed against traders from Ukraine, Russia, and Los Angeles.

How do the events described in this article demonstrate the critical need to maintain the security of financial information?

Answer 1

Insider trading is based on private information which is not yet made public or available in public domain. Trading on the basis of such sensitive information affects the price of a stock. Such trading has a negative impact on investor confidence over capital market and overall economy.