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No, they all address illegal insider trading. If all forms of legitimate trading on material nonpublic information were illegal, then information asymmetry in t
by throwawaymath 8y ago
No, they all address illegal insider trading. If all forms of legitimate trading on material nonpublic information were illegal, then information asymmetry in the market would be outlawed. That would make it impossible to legally profit using any kind of financial research.
- ben509 8y ago"If all forms of legitimate trading on material nonpublic information were illegal, then information asymmetry in the market would be outlawed." FWIW, I'm not expressing an opinion on insider trading, just arguing that this specific claim is overly broad. If your only relation with a company is to own stock in it, you're not an insider, but any research you do may be based on public information, but is nevertheless material and as private as you keep it. And there's a lot of research to do. The economic fable "I, Pencil" is about the sheer number of firms that any given firm is indirectly dependent on and indirectly affects. Thus, if you see shocks affecting any upstream suppliers, the shocks are public information but your knowledge that it's relevant to the firm you're invested in is private to you.