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> The argument goes, if you had perfect information symmetry, then the transaction would not have occurred, as the person who was willing to buy or sell the sto
by notahacker 6y ago
> The argument goes, if you had perfect information symmetry, then the transaction would not have occurred, as the person who was willing to buy or sell the stock (for your profit, with information assymetry) would rather keep the profit for themselves.
Additional relevant context: whilst most trades can be considered to have winners and losers, in the case of insider trading the executives responsible have created losers from the [former] shareholders they're being paid to work for.
Aside from undermining trust in their communication if they're intentionally concealing information to profit from, the other problem is that it's easier for executives to create insider trading opportunities by making unexpectedly bad decisions than unexpectedly positive announcements...
- solatic 6y agoYou're right, but to be fair, you can have such a conflict of interest within privately held companies as well, where it would be well outside the scope of the SEC and entirely at the risk of private investors. Also, in some very notable examples of public companies where executives hold too large of a share of equity (primary example: Mark Zuckerberg and Facebook), public shareholders are unable to hold management accountable for decisions which public shareholders consider to be against their interests. So either one or both are true: such a scenario is better handled by corporate boards, and/or the SEC needs more teeth to prevent the consolidation of ownership / control of public companies.