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Should insider trading be legalized? It's apparently unenforceable.

• OliverJones 9y ago
  Should it be legal? That depends on your view of the purpose of the market in stocks. If you believe the basic purpose is to provide capital for enterprises from the savings of individuals and the earnings of other businesses, insider trading is probably a bad idea. It erodes trust in the system and makes suckers out of the people with 401k retirement savings. It eats into the returns that can be earned by competent fund managers for savings. If you believe that the stock market's primary purpose is enabling arbitrage then insider trading is a good idea. Legalizing insider trading would make it very hard for managers of public companies to do their work. As things stand today there's a "blackout period" each quarter. That's the time when the managers of the company know the results of the previous quarter, but they haven't yet told the public. Legalizing insider trading would eliminate the blackout period. The market would be flooded with rumors and speculation. "An assistant comptroller at QRS Corporation says they lost a big customer. He's a friend of a friend." What a mess that would cause! It would make it even more attractive for companies to go private and remove the ability of the public to invest and share in their success.