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> people with direct knowledge of actual insider trading have a strong incentive to report it We're talking theoretically: Your point is one factor. Another is

> people with direct knowledge of actual insider trading have a strong incentive to report it We're talking theoretically: Your point is one factor. Another is the profit from insider trading may far exceed the reward. Also, people who report it must become 'rats'; they risk sending their coworkers (and possibly friends) to jail, never working again on Wall Street, being completely ostracized socially and in the industry, and having the reputation of a traitor. But again, that's theoretical. I don't believe I know how it works in practice without some good inside sources.

ng12 10y ago
Do you know how much Martha Stewart went to prison over? $45,763. And she was a wealthy, well connected celebrity. Risk v. reward skews heavily towards risk. As far as being a rat 1). you can face prosecution for being aware of insider trading without reporting it and 2). anyone who's convicted legally cannot work for any SEC regulated institution ever again. I'm sure some people do insider trading and get away with it, but some people also rob banks and get away with it. I just don't see any evidence pointing to the prosecution of it being lax.
- hackuser 10y ago
  > Do you know how much Martha Stewart went to prison over? $45,763 That's just one example, and probably not a representative one, being a high-profile case. Sometimes they are made examples of. > Risk v. reward skews heavily towards risk. ... I just don't see any evidence pointing to the prosecution of it being lax. I don't see much evidence either way except for the SEC's billions in fines which someone cited above, which necessarily mean that it's happening in large volumes.