By: Aron Martens

Aron Martens — Tue, 23 Nov 2010 18:36:34 +0000

On what moral or economic principle can you defend the ban on insider trading? Why should a person who has ANY information not be permitted to act on it for his benefit? In fact, this person acting on insider information provides a useful social good. The mere fact of acting on it affects the price and acts as an early warning to other investors who do not have access to the original information. In this way, the information that was once only available to the “insider” is made available to all. Witholding this valuable information can serve no useful purpose. In fact it can send out a false signal and encourage investments based on this false signal. One could argue that the Enron debacle would have had fewer casualties had those on the inside been permitted to act on this information and send out signals much earlier, that all was not well. Fewer outside investors might have suffered fewer losses. And then, how do you deal with the situation of an insider who happens upon negative information on a company, “failing to buy a stock” that he otherwise might have purchased”? Why would you want to kill the “canary in the coal mine”?

By: Investor-Protective Analysis or Illegal Insider Trading? « Truth on the Market

Mon, 22 Nov 2010 15:23:32 +0000

[...] Analysis or Illegal Insider Trading? « Truth on the Market on The return of Rudy GInsider trading: Bainbridge responds « Truth on the Market on The return of Rudy GJosh Wright on Carl Shapiro on BCBS and the New [...]

By: Some Links

Some Links — Mon, 22 Nov 2010 14:33:06 +0000

[...] Truth on the Market’s Larry Ribstein debates insider-trading regulations with Prof. Bainbridge. [...]

Comments on: Insider trading: Bainbridge responds

By: Aron Martens

By: Investor-Protective Analysis or Illegal Insider Trading? « Truth on the Market

By: Some Links