3 ms·
> That in the event of something bad happening, the insiders don't get to bail first. I don't get this. What's wrong with victimized insiders, who are just dro
by dheera 5y ago
> That in the event of something bad happening, the insiders don't get to bail first.
I don't get this. What's wrong with victimized insiders, who are just drones and aren't responsible for the decisions of the company, bailing first?
What I think makes much more sense is to not let large shareholders, especially executives with decision-making power, bail first.
Small insiders are typically victims, not perpetrators, of bad news, and not rewarded enough for good news.
How about a system in which if a low-paid worker of a company (say a warehouse worker, driver, etc. who is having trouble paying their rent) trades 1 share, it goes through in 1ms, giving them an edge over the hedge funds, but if the CEO trades 100000 shares, it takes 3 months before the order goes into the order book and gets executed? In such a system we could allow insider trading, it's just that those trying to bail out of millions of dollars just can't.
- hervature 5y agoYou are failing to understand the information component again. Insiders can definitely trade. The low-paid worker and CEO can trade just like outside investors. But the CEO is under much closer scrutiny and thus usually have regular stock sales so that they can claim "I have been selling 1,000 shares every month for the last 3 years" when faced with criticism. Again, the low-paid worker is free to trade whenever. But if the SEC spots an someone who consistently gets outsized returns in peculiarly timed trades, they are going to investigate. That person better have no proof of material non-public information at the time of those trades.
- mirker 5y agoYou’d have to also control external “laundering” of money through the insiders. The hedge funds could pay the insiders for trades or information.