Why is this a bad thing?

[KrazyHorse]

http://www.thenationalbusinessassociation.com/content/JFQA-394-Ziobrowski-Proofs.pdf

(question is rhetorical, though not for the intuitive reason)

Summary: The asset portfolios of senators significantly outperforms relevant market indices, indicating that they are trading on material nonpublic information

[Bugs ****ing Bunny]

So you can boil this down to "Why is insider dealing considered to be a bad thing?".

[Asher]

I refuse to believe the senators would be tainted by such injustice. They are righteous men and (token) women who stand up for their electorate and represent the best America has to offer.

[Bugs ****ing Bunny]

If I was a cynic, I'd suggest it's because the sort of people who have the greatest influence over the laws covering market abuse, are the sort of people with a greater vested interest in avoiding stock market crashes. Therefore they seek to maintain wider public confidence in the markets through these laws, even if those markets are actually badly in need of correction.

[KrazyHorse]

So you can boil this down to "Why is insider dealing considered to be a bad thing?".

I think insider trading is actually a good thing, all else being equal.

[SlowwHand]

Can we get a statement from Martha Stewart?

[Asher]

Insider trading laws (or at least rules) tend to be retarded.

I'm not permitted to trade my company's stock for something like 260 days a year...

[SlowwHand]

You really don't see a problem with insider trading?

[Wiglaf]

I refuse to believe the senators would be tainted by such injustice. They are righteous men and (token) women who stand up for their electorate and represent the best America has to offer.

THUMBS UP

Sent from my iPad

[Aeson]

It's a bad thing because only Wiglaf benefits from this! :P

[onodera]

I find the idea of trading stocks with NO insider information laughable. If you don't have a huge number cruncher to make predictions like banks do (and even they fail), stock exchange is basically a casino.

[Bugs ****ing Bunny]

There's nothing wrong with insider dealing if you can live with the fact that there would be an elite who would deal at an advantage. That removal of the artificially-levelled playing field would probably dissuade a lot of Joe Schmoes without the right connections from investing, if they realise the implications of this. The reduced demand would probably cause a fall (or correction, if you prefer) in share prices. This would upset all those important people in their 60s who are sitting on large portfolios and feel like cashing in very soon. So we have laws against it, under the guise of "protecting the public."

Again, that's the cynic's take on it.

[KrazyHorse]

The cynic's take is correct, but if people behaved at all rationally what would fall would be trading volumes, not prices...

[Elok]

Question: how exactly are "insider trading" laws enforced in the first place? I've only skimmed Wiki on the matter, because econ and finance jargon makes my head explode, but the idea seems unenforceable. Speculating on what makes a person buy or not buy (assuming he doesn't post "yeah I bought 500 shares of MegaCorp because I hear they're planning to do X" on Facebook) is asinine. Unless you're a celebrity and you have twelve magazines eying your every move, you should get away with it ninety-nine times out of a hundred.

[Bugs ****ing Bunny]

With directors and executives, it's easy- their sharedealings are carried out in public. It's when you have people more removed from the process that it gets harder, but that's why you have Risk departments watching it.