Don, you disappointed me. This is not even an argument. Do you seriously (and naively) think that ALL market participants have the same information? So again, who gets hurt by good news insider trading? If insider trading was allowed, the result would be smaller gaps at earnings because the price would move accordingly before the announcement. Market efficiency....
I'm sorry but after all this arguing are the proponents of the law completely OBLIVIOUS to the fact that IT DOES NOT WORK. Insider trading is rampant today and almost accepted at the higher circles. All the law has done is prevent the mom & pop to use it. I dunno why, but it's a bit obvious to me that the law is just an edge for the esoteric (Goldman Sachs, Congress & richest 1% comes to mind). Because if some critical info comes out, the law prevents the smaller guys to act on it. "Inside information" is not very difficult to get. People that work in the industry are privy to the information before the rest. It's common sense. So let's bring up the IMCL example. Either way you look at it, it was gonna gap down hard. And I'm sure more than just the CEO knew about it. Had everyone been allowed to act on it, the decline would have been more obvious as the news disseminates through the market. And some, if not most, will be the last to sell and be bagholders. That's how it goes. All the top brokers advise their richie rich clients on inside info that they get. This is a fact, if you have friends very well knowledgeable of the brokerage industry they will confirm this. They get away with it easily. Our Congress is so blatant about trading on inside info that it's pretty much accepted. Traders see it on a regular basis in the market, at times it's so obvious but nothing ever happens. The CEOs and insiders will always tell half truths, at times blatant lies. They will trade on that, the law has changed little about it. In R.O.S., the narrator clearly discusses this. His advice is basic: due diligence. If the CEO lies about the company doing great & selling his shares, while there is bad news pending, the issue is that he is lying. If there are bad news pending and as the information gets disseminated from the CEO to the rest of execs & employees, I see no issue with them selling the shares as long as they do not make misleading statements. The smart investors will take notice and do more research and sell shares. The dumber ones get to be bagholders waiting to be last ones to know what's going on. Seems normal to me. You guys can throw tons of examples of how it is unethical and all that jazz and I get what you are saying cause that's the idealism of insider trading law. But take a realism approach at it, you gotta be insane to think that it is working. It creates a special edge for the priviliedged, and I reckon that was the true cause behind it, just like many other laws created by our wonderful SEC.
is Martha Stewart considered "RICHIE RICH"?...I dont think anyone here is argueing that it doesnt occur....it occurs on a daily basis...the argument is...Does it hurt the public?? we also know it is wrong ( its against the law making it wrong period )...does it hurt the public?? I say it does..how much is the question???
"Because insider trading undermines investor confidence in the fairness and integrity of the securities markets, the SEC has treated the detection and prosecution of insider trading violations as one of its enforcement priorities." http://www.sec.gov/answers/insider.htm Imagine, as rigged and crooked as the markets already are ... people are actually suggesting legalizing currently unlawful practices would not result in a Net Negative. No-One Wins, If No-One Plays...
pekelo, this is a good argument: why a poker player should be aware of his opponent hand and the rest of the field not? cuz its more or less the same thing innit...2 persons make opposite bets but one already knows the outcome of his, innit clear who's the loser? and is it right?
Why should the market be more fair than the real estate industry or the restaurant business? Are they fair? Hell not. They are regulated, sure. But not fair.... And it is naive to think that the markets are fair today. New argument: Insider trading would make gaps smaller or non- existent. I don't know about you guys, but generally I don't like gaps. Insider info coming out the stock would move before announcements and gaps would be smaller....
The correct argument would be if the player is aware of the coming cards, and not the opponent's hand.... The difference is that in sport we are trying to have an even field for the competitors, up to a point. In the mentioned poker example it is the randomness of the coming cards.... In the markets, with the insider trading rule the SEC is trying to level the field as information goes. But the goal is also to have as much information aviable as fast as possible of the companies. That could be achieved only with free insider trading. Here is an example: Let's say I am an accountant at Enron. The CEO of the company is pumping the stock like there is no tomorrow, although I seeing the books can tell that a crash is coming. With my insider trading (or even releasing info)missleading the public could have been avoided...