{"id":933,"date":"2009-11-08T05:37:48","date_gmt":"2009-11-08T05:37:48","guid":{"rendered":"http:\/\/euvolution.com\/futurist-transhuman-news-blog\/?p=933"},"modified":"2009-11-08T05:37:48","modified_gmt":"2009-11-08T05:37:48","slug":"should-insider-trading-be-illegal","status":"publish","type":"post","link":"https:\/\/www.euvolution.com\/futurist-transhuman-news-blog\/libertarianism\/should-insider-trading-be-illegal.php","title":{"rendered":"Should Insider Trading be Illegal?"},"content":{"rendered":"<p>In a <a href=\"http:\/\/online.wsj.com\/article\/SB125570373292090093.html?mod=WSJ_hps_LEFTWhatsNews\">case<\/a> announced yesterday,<\/p><blockquote><p>federal authorities exposed what they claim is the biggest insider-trading ring in a generation -- a conspiracy in which a hedge-fund kingpin and executives at blue-chip firms including IBM and Intel allegedly connived to profit on Google and other big-name stocks.<\/p><\/blockquote><p>I take no stand on whether the individuals accused in this case broke existing law; if so, the feds should prosecute them.<\/p><p>But it is not obvious that insider trading should be illegal.<\/p><p>The main argument for a ban is that it protects outsiders from being taken advantage of by insiders.  Perhaps, but in a world with no ban, outsiders would be more careful about trading with insiders, so the net impact on who gains and loses from inside information might be modest.<\/p><p>More importantly, insider trading means that information about a company's prospects become incorporated in its stock price sooner rather than later; this is a good thing.<\/p><p>Insider trading can act as a check on malfeasance within a company; insiders who know the books are being cooked, for example, can start dumping their stock, alerting the market that something is up.<\/p><p>In a world with no ban, small investors might fear to trade individual stocks and would face a greater incentive to diversify; that is also a good thing.<\/p><p>On top of all this, consistent enforcement of the ban is close to impossible.  Authorities catch a tiny fraction of violations, so honest insiders obey and dishonest insiders still profit.<\/p><p>So, my strong hunch is that the ban does more harm than good.<\/p><div><img loading=\"lazy\" decoding=\"async\" width=\"1\" height=\"1\" src=\"http:\/\/euvolution.com\/futurist-transhuman-news-blog\/wp-content\/plugins\/wp-o-matic\/cache\/07f5c_6379328854053402400-1274221623874577475?l=jeffreymiron.blogspot.com\" style=\"padding-left:10px; padding-right: 10px;\"><\/div>","protected":false},"excerpt":{"rendered":"<p>In a case announced yesterday,federal authorities exposed what they claim is the biggest insider-trading ring in a generation -- a conspiracy in which a hedge-fund kingpin and executives at blue-chip firms including IBM and Intel allegedly connived to profit on &hellip; <a href=\"https:\/\/www.euvolution.com\/futurist-transhuman-news-blog\/libertarianism\/should-insider-trading-be-illegal.php\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"limit_modified_date":"","last_modified_date":"","_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[27],"tags":[],"class_list":["post-933","post","type-post","status-publish","format-standard","hentry","category-libertarianism"],"modified_by":null,"_links":{"self":[{"href":"https:\/\/www.euvolution.com\/futurist-transhuman-news-blog\/wp-json\/wp\/v2\/posts\/933"}],"collection":[{"href":"https:\/\/www.euvolution.com\/futurist-transhuman-news-blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.euvolution.com\/futurist-transhuman-news-blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.euvolution.com\/futurist-transhuman-news-blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.euvolution.com\/futurist-transhuman-news-blog\/wp-json\/wp\/v2\/comments?post=933"}],"version-history":[{"count":0,"href":"https:\/\/www.euvolution.com\/futurist-transhuman-news-blog\/wp-json\/wp\/v2\/posts\/933\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.euvolution.com\/futurist-transhuman-news-blog\/wp-json\/wp\/v2\/media?parent=933"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.euvolution.com\/futurist-transhuman-news-blog\/wp-json\/wp\/v2\/categories?post=933"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.euvolution.com\/futurist-transhuman-news-blog\/wp-json\/wp\/v2\/tags?post=933"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}