Insider trading occurs when a company insider such as an executive

Here is OE from MGMAT

(1) Identify the Question

The words strengthen and if true in the question indicate that this is a Strengthen the Argument question.



(2) Deconstruct the Argument

More people in Country Z are being charged with insider trading. This increase is not due to increased insider trading but rather due to increased effectiveness on the part of the regulators—in other words, they are better at catching people now than they were before.

Here is one possible way to map the argument.

++ People charged with IT

Not due to more IT

© More effective reg



(3) State the Goal

On a Strengthen question, the goal is to find an answer that makes the argument more likely to be valid. In this case, the answer should support the idea that the increase in people charged with insider trading is due to the fact that regulators are becoming more effective at finding people who break the law.



(4) Work From Wrong to Right

(A) No information is provided about whether the regulators responsible for enforcing insider trading regulations are also responsible for enforcing the regulations related to other financial crimes. Therefore, the number of people charged with other financial crimes is not relevant.

(B) The argument relies on statistics about the number of people charged with insider trading, not the penalties that these people receive. This answer may support the idea that Country Z is concerned with insider trading but it does not address whether the increased number of people charged is due to an increase in insider trading or an increase in the effectiveness of those charged with enforcing the laws.

(C) CORRECT. This answer provides support for the idea that regulators have become more effective. If investigators are able to review more trades, they are likely to catch more insider trading, even if the amount of insider trading did not change.

(D) No information is provided about the skill or effectiveness of the new head of the agency compared to the previous head; without more information this answer does not affect the conclusion.

(E) It is not clear how the total number of trades affects the amount of insider trading. If anything, this answer could provide an alternative explanation for the increase in charges related to insider trades. If it is assumed that insider trading is proportional to total trading, then there could be more insider trading because total trading increased.