Given that Poly has granted me the ability to time travel....

[KrazyHorse]

What bad incentives?

[Kuciwalker]

It lets corporate insiders profit by increasing the volatility of the stock even if they don't affect the average price.

[KrazyHorse]

Corporate insiders mostly do not have much control over stock prices. Those who do place large value (in general) on being seen to increase the stock's value relative to the amount of money they could make by ****ing with their company.

[Al B. Sure!]

I'd like to make one point re: insider trading...

If I have insider knowledge and this knowledge encourages me to not take an action that I otherwise would have taken (ie- buy a stock, sell a stock, etc.), did I commit a crime? Has anyone been charged for insider trading under these circumstances, although I clearly could profit from such knowledge? No.

[KrazyHorse]

That is a well-known and discussed point.

[Al B. Sure!]

What? Wouldn't be the first time a well-known and discussed point has been posted on apolyton.

[Heraclitus]

One often hears that the insider rules are set up to protect investors from getting ripped off.


This is of course bull since purpose of the market is to aggregate information, wtf subvert this by theoretically excluding informed participants? Just warn individual investors that trying to pick stocks is likley to end up with them getting ripped off, they should know this anyway even with the ban in place.

Also, the argument that more insider trading would produce less net stock investment is overstated.

[Al B. Sure!]

ripped off how?

[Japher]

pump and dumps from the insiders...

[Al B. Sure!]

What effect on volume do you think an insider would have though?

[Flubber]

By this same rationale, all insider trading should be legal (which I actually believe....a belief I will not act upon so long as it is illegal/considered unethical).

Interesting-- So a company is trading at 20 per share and an investment banker knows his client is about to put in a bid for 28 per share and thats fair?


I am actually asking for the rationale on this. As a lawyer I was aware of a hostile takeover bid about 10 days before it was announced . Both insider trading and professional ethics rules prevented me from cashing on this knowledge but it would have been easy money.

I have had a number of other occasions where I had actual knowledge that could make me money

[Flubber]

What effect on volume do you think an insider would have though?

ON a large corp, an individual insider would be negligible. But a corporate insider (for example, the bank that is providing funds for a takeover bid at a 30% over the trading price) could have the actual ability to snap up a significant number of shares

[KrazyHorse]

Interesting-- So a company is trading at 20 per share and an investment banker knows his client is about to put in a bid for 28 per share and thats fair?


I am actually asking for the rationale on this. As a lawyer I was aware of a hostile takeover bid about 10 days before it was announced . Both insider trading and professional ethics rules prevented me from cashing on this knowledge but it would have been easy money.

I have had a number of other occasions where I had actual knowledge that could make me money

Yes, the insider trading would be efficiency enhancing...

[Al B. Sure!]

Did you really feel it was necessary to express that by bumping a thread that is almost two months old?

[KrazyHorse]

???