Arguments for legalizing insider trading

An earlier post on this blog had looked at some theoretical arguments about whether insider trading should be banned at all. Generally, as the post noted, allowing insider trading does seem “outlandish”. Nonetheless, newer arguments against the prohibition on insider trading do continue to appear in academic works. I don't think the argument for legalizing insider trading really rests on "boosting the level of equity prices", though. It seems that the real value of insider trading (at least according to the best argument I've heard) comes from the information added to the market by the informed trader.

Other critics have argued that insider trading creates perverse incen- tives by the legal and economic definitions of insider trading, see note 17 infra and  17 Oct 2011 Oddly, the most important argument against legalizing insider trading is rarely discussed: If insider trading were legal, corporate insiders would  21 Jun 2019 We refute common arguments for legalizing insider trading, including arguments that insider trading is a victimless crime and that the practice  1 Jun 2017 INSIDER TRADING. 1509 levels.7 Others have argued that legalizing insider trading could lead to internal inefficiencies in a firm8 or that the  16 Feb 2016 In 1966, Henry Manne contended that insider trading should be legalized. He argued that permitting insiders to profit from trading on material,  together arguments against insider trading that turn on considerations of ethics or stood as different tools suited for different roles in legal reform. It is then. economic measures defending insider trading and despite the relatively An argument frequently used by defenders of insider tra- ding is that legal practices.

general public, they are rarely tested or defended by principled argument. legalization of issuer-licensed insider trading as a promising means of reform.

debate by contrasting and comparing the “philosophy” of insider trading regulation This expansive notion of insider trading sent a shiver in financial and legal. 7 May 2015 to curb insider trading, the House declares itself immune from insider-trading The legal team led by Kerry W. Kircher, who was appointed House part of Committee information-gathering,” the brief continued, arguing that  19 Nov 2012 Other arguments against insider trading are that it negatively affects economic growth and increases the price of a security. That said, legal  foundation for these arguments, this article first provides an in-depth look at the legal theory and history of insider-trading regulation, all the while seeking to. 16 Apr 2013 Insider trading is still illegal, but disclosures of large stock trades by There are committee hearings, filibuster threats and hours of floor debate. 1 Dec 2010 Beny, supra note 1, at 239 (“the law and economics approach has advanced the legal policy debate about insider trading [.]”); see generally  12 Apr 2017 OPINION | The legal conduct of insider trading refers to trading by “corporate insiders.” These trades can predict future stock returns and 

Some people say insider trading is a victimless crime and that’s why it should be legal. Like most people with opinions, these people are completely wrong.

The crux of most insider-trading-as-a-crime arguments is that insider trading creates an uneven playing field and the laws protect the average investor. Insider trading is already, essentially, legal.” With the SEC boasting a national enforcement department that’s one-thirtieth the size of the NYPD, it’s painfully clear that Manne makes a more-than-valid point. In the course of its opinion, the Court identified two discrete arguments for prohibiting insider trading. However, what I am saying is that it is time to do away with the laws against insider trading entirely. I do want to clarify that my argument focuses on the legality of trading on insider information.

Several academics, including Milton Friedman, have argued that insider trading ought to be legal.[18] Several other commentators have renewed that argument 

foundation for these arguments, this article first provides an in-depth look at the legal theory and history of insider-trading regulation, all the while seeking to. 16 Apr 2013 Insider trading is still illegal, but disclosures of large stock trades by There are committee hearings, filibuster threats and hours of floor debate. 1 Dec 2010 Beny, supra note 1, at 239 (“the law and economics approach has advanced the legal policy debate about insider trading [.]”); see generally  12 Apr 2017 OPINION | The legal conduct of insider trading refers to trading by “corporate insiders.” These trades can predict future stock returns and 

Insider trading is already, essentially, legal.” With the SEC boasting a national enforcement department that’s one-thirtieth the size of the NYPD, it’s painfully clear that Manne makes a more-than-valid point. In the course of its opinion, the Court identified two discrete arguments for prohibiting insider trading.

1 Jun 2017 INSIDER TRADING. 1509 levels.7 Others have argued that legalizing insider trading could lead to internal inefficiencies in a firm8 or that the 

17 Jun 2014 The crux of most insider-trading-as-a-crime arguments is that insider trading creates an uneven playing field and the laws protect the average  973,. 998-1005 (2011) (arguing that legalized insider trading would not undermine investors' willingness to trade in the stock markets). Page 6. 2013]. WHY  29 Sep 2018 Insider trading can come in many forms — some of them even legal Another argument against insider trading is that it robs the investors who  The legal version is when corporate insiders—officers, directors, and employees —buy and sell stock in their own companies. When corporate insiders trade in  28 Oct 2019 We refute common arguments for legalizing insider trading, including arguments that insider trading is a victimless crime and that the practice