11/30/2005

Insider Trading

"Illegal insider trading – occurs when a person, who has special access to or is aware of unpublished corporate information, uses that information to make a profit by selling or buying corporate securities. If that person wrongfully obtains this nonpublic information, the trader has committed insider trading." (Source) Insider trading seems to be more and more of a topic of todays news. It seems that the people that are running corporations, or those with insider information or becoming more and more greeding or unethical. I at one time thought it was stupid for people to go to jail for insider trading. But after I read more about it I can see the issue. Most people trade fairly on the stock market. They do their research and make investments that they feel to be the best. So those with insider information should have an upper hand on the rest of us. The outcome of most insider trading schemes end with hurt markets and money that lose money. So I now think that it is a good thing that insider traders go to jail.

2 comments:

Frank said...

I agree Oprah has God-like marketing powers. With her women followers it’s cult like if you ask me, and yes if I was selling something I’d want her to indorse it on her show.

Dr. Tufte said...

-1 on Liz's comment for grammatical errors.

-1 on Frank's comment - are you checking to see if I actually read these (or did you cut and paste your comment into the wrong place from Word)?

I think you are missing out on the value to society of insider trading. If insiders have information that others don't, wouldn't it be better for society as a whole if that got out? If so, why penalize insider traders?

In some sense, insider trading can be a form of whistleblowing.