Making Insider Trading Legal

If "material nonpublic information" is illegal to trade on, then the entire job of the intelligent investor ceases to exist. It becomes illegal to do thorough research.

So of course the source of the information matters.

I'm sympathetic to the argument that it's bad to take illegally obtained data and pass it along in a don't ask, don't tell manner to avoid prosecution. But that Dell data? The guy's job at Dell was to share company info with investors. To say the information was obviously dodgy is total nonsense.

Re: Making Insider Trading Legal

#5

Post by Dylan16807 » Sun, Nov 01, 2015, 4:29 PM UTC

kawera wrote: post #3

Same article posted yesterday: https://news.ycombinator.com/item?id=10483032

I'm sorry you didn't get upvotes out of randomness or timing but it doesn't help to link a previous submission with no comments.

Re: Making Insider Trading Legal

#6

Post by gus_massa » Sun, Nov 01, 2015, 4:32 PM UTC

kawera wrote: post #3

Same article posted yesterday: https://news.ycombinator.com/item?id=10483032

This was reposted a few times: https://hn.algolia.com/?query=Making%20Insider%20Trading%20L...

From the FAQ:

> Are reposts ok?

> If a story has had significant attention in the last year or so, we kill reposts as duplicates. If not, a small number of reposts is ok.

It's not very clear what significant means, but all the previous submissions have 0 or 1 points and no comments.

I think that one problem with dupes is that the previous submission have some interesting comments that are "lost", so if I find a very interesting comment I quote part of it in the new submission.

Re: Making Insider Trading Legal

#7

Post by notacoward » Sun, Nov 01, 2015, 4:34 PM UTC

Dylan16807 wrote: post #4

If "material nonpublic information" is illegal to trade on, then the entire job of the intelligent investor ceases to exist. It becomes illegal to do thorough research. So of course the source of the information matters. I'm sympathetic to the argument that it's bad to take illegally obtained data and pass it along in a don't ask, don't tell manner to avoid prosecution. But that Dell data? The guy's job at Dell was t…

> It becomes illegal to do thorough research.

Ridiculous. Having access to information others don't is privilege, not thoroughness. You can be just as thorough as you want, so long as others are not prevented from being likewise. Without that, capital markets cease to be open. That way lies oligarchy.

Re: Making Insider Trading Legal

#8

Post by maxerickson » Sun, Nov 01, 2015, 4:38 PM UTC

Dylan16807 wrote: post #4

If "material nonpublic information" is illegal to trade on, then the entire job of the intelligent investor ceases to exist. It becomes illegal to do thorough research. So of course the source of the information matters. I'm sympathetic to the argument that it's bad to take illegally obtained data and pass it along in a don't ask, don't tell manner to avoid prosecution. But that Dell data? The guy's job at Dell was t…

"material nonpublic information" is a term of art. It means internal company information that is relevant to understanding the future financial performance of the company. Research based on outside information wouldn't be material nonpublic information.

Re: Making Insider Trading Legal

#9

Post by enraged_camel » Sun, Nov 01, 2015, 4:39 PM UTC

notacoward wrote: post #7

Dylan16807 wrote: post #4

If "material nonpublic information" is illegal to trade on, then the entire job of the intelligent investor ceases to exist. It becomes illegal to do thorough research. So of course the source of the information matters. I'm sympathetic to the argument that it's bad to take illegally obtained data and pass it along in a don't ask, don't tell manner to avoid prosecution. But that Dell data? The guy's job at Dell was t…

> It becomes illegal to do thorough research. Ridiculous. Having access to information others don't is privilege, not thoroughness. You can be just as thorough as you want, so long as others are not prevented from being likewise. Without that, capital markets cease to be open. That way lies oligarchy.

Not sure why you're getting downvoted. You're absolutely correct. Having access to insider information is about knowing people on the inside, or having some sort of special access to that information. By definition, it gives the person unfair advantage over others in the market.

Re: Making Insider Trading Legal

#10

Post by Dylan16807 » Sun, Nov 01, 2015, 4:40 PM UTC

notacoward wrote: post #7

Dylan16807 wrote: post #4

If "material nonpublic information" is illegal to trade on, then the entire job of the intelligent investor ceases to exist. It becomes illegal to do thorough research. So of course the source of the information matters. I'm sympathetic to the argument that it's bad to take illegally obtained data and pass it along in a don't ask, don't tell manner to avoid prosecution. But that Dell data? The guy's job at Dell was t…

> It becomes illegal to do thorough research. Ridiculous. Having access to information others don't is privilege, not thoroughness. You can be just as thorough as you want, so long as others are not prevented from being likewise. Without that, capital markets cease to be open. That way lies oligarchy.

You can figure out information other people don't have through pure diligence, without privilege.