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In those countries where insider trading is either explicitly allowed or laws against it are never enforced, nobody without inside information wants to play, because they know the game is rigged.
As opposed to the game being always rigged but without everyone knowing... just the insiders.
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Something I was always curious about, but I lack the legal background to find the answer. What if public information showed that you should sell the stock, but you decide to hold it instead (i.e., not do anything at all) because you have insider information that the company will be doing much better than expected? The "not selling" part (assuming you bought stock prior to having insider knowledge) is a form of inside…
AFAIK, that wouldn't be considered insider trading since there was no trade. However, there's an even more interesting wrinkle. In that case, you plan trades well in advance, and then cancel them based on insider information. In one case, that was rules to not be insider trading either. https://en.wikipedia.org/wiki/SEC_Rule_10b5-1 "After Rule 10b5-1 was enacted, the SEC staff publicly took the position that cancelin…
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Indeed, insider trading benefits everybody by adding more information to the markets, leading to more accurate prices.
To people disagreeing with this, can you give a counter argument? On face value, what rosndo said seems to make sense.
In practice. The world is unfair, and retail investors must compete against all kinds of people with unfair advantages.
If insiders could legally trade, then the ability to profit off insider trading would go down.
Not a sympathizer of these idiots who clearly thought that would get away. But what really astonishes me is how SEC is consistently after these retail small players when members of congress and its different committees are brazenly involved in insider trading and no one bats an eye. Hell even the Fed itself and its members were involved in trades that could only be explained by insider knowledge. My sense is SEC want…
pretty convenient laws when you make the laws.
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To people disagreeing with this, can you give a counter argument? On face value, what rosndo said seems to make sense.
I actually agree it should be legal, but the argument is basically one of fairness. That in the market, retail investors compete against insiders. In practice. The world is unfair, and retail investors must compete against all kinds of people with unfair advantages. If insiders could legally trade, then the ability to profit off insider trading would go down.
The argument that insider trading should be banned because it is somehow disproportionately unfair is quite weak, the argument that it creates an impression of unfairness is a much stronger one.
I personally don’t believe it is a particularly good argument, but it is certainly the strongest version of the argument against insider trading.
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Indeed, insider trading benefits everybody by adding more information to the markets, leading to more accurate prices.
To people disagreeing with this, can you give a counter argument? On face value, what rosndo said seems to make sense.
Auditors are a good example. They have privileged information and are responsible for the fairness of financial information / disclosure. Their incentives are already complicated by the compensation structure, i.e. the company they attest for pays their fee and ultimately decides whether they will work together in the future.
In this instance, an abolishment to insider trading regulation would ultimately undermine trust in the financial reporting system. The auditors could potentially place bets on their engagements and negotiate results based on their interests. Impartiality would be compromised. There are safeguards in place currently, penalties for insider trading are part of the remedy.
> On several occasions between late March and early May 2020, before Twilio’s public earnings announcement, Sure, Lagudu and Chotu Pulagam used internal chat channels to discuss in Telugu whether Twilio might exceed market expectations in its quarterly report of earnings, due in May 2020. They concluded that Twilio’s stock price would “rise for sure” after the quarterly results were announced publicly. https://www.se…
probably or they wouldnt have used telugu. maybe assuming it would be harder to get caught
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Indeed, insider trading benefits everybody by adding more information to the markets, leading to more accurate prices.
To people disagreeing with this, can you give a counter argument? On face value, what rosndo said seems to make sense.
I can’t understand the rationale behind blowing up your life and career in which you made $300k+/year for a tiny $1m gain split between 3 people and their families. Why are people who should otherwise be much smarter than this doing incredibly dumb things? Just greed? and entitlement?