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Critically Analyse Insider Trading Using Kant’s Universal

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this is a perfectly adequate and normal way to act.

Kant believed that “morality needed to be based on duty and obligation, not on feelings or inclinations.” (UNISA:250) Moral rules could be known through reason and not just by observation. Actions performed to please people or to gain advantages for ourselves cannot be regarded as right actions. All people should be acknowledged and treated as people and not just as a means to an end or as an instrument in performing a certain job. For me, this is the basis of all good (conscious) decision making and why I would support Kant’s point of view on insider trading. Whereas the obvious nature of insider trading is to further one’s own means Kant argued that no good will come of self-fulfilment but rather one should act in a way that truly aims at furthering society as a whole as this would ultimately be more beneficial to one than to go after individual gains. (UNISA:251) If we look at Kant’s values based approach we see that it in no way would find insider trading an ethical way of performing business. As the insider acts purely for his own benefit.


Although naive at some points in his argument (business after all is to maximise profit), I believe that Kant’s universal approach to ethics is ultimately an approach which embodies humanity and would bring out the best in us all which would cause a society not only to flourish but to function in a harmonious manner. Following Kant’s rules might not always lead to a positive outcome for the person and therefore is very tricky to enforce. We all act in a self preserving way by nature, and it would take a conscious decision and sometimes a very difficult conflicting thought process to get to the point to act morally even at the detriment of oneself. But this is essential if we want to make morally and ethically sounds decisions.

There are arguments on both sides of this issue of insider trading but I believe that the moral problem is rooted in fairness. It is not fair that a few people are able to benefit off the backs of others purely because of privileged information. Especially when these people (insiders) had a duty to act on others’ behalf.

Even though insider trading may be beneficial to the economy in some way it doesn’t negate the fact that it is an unfair practice and damaging to the majority of stock holders who do not have these connections to the “select inside few” (and their information) of the organization. It is an unfair advantage that the insider has and that he should not act upon as it only breeds greed and distrust in the economy which will ultimately lead to its downfall.


Ally, M. Bentley, W. et al. 2010.Theoretical and Applied Ethics. Only study guide for PLS3701. Pretoria: University of South Africa.

Carey,D. 2014. Business Ethics and Insider Trading. Available at:

Accesed on: 20/03/2014

Velasquez, M. G. (2002). Business ethics: Concepts and cases (5th ed.). Upper Saddle River, NJ: Prentice Hall.

Wikipedia.2014. Available at:

Accessed on: 20/03/2014


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