3 ms·

Matt Levine had a pretty good column on this the other day: https://www.bloomberg.com/opinion/articles/2021-09-29/insiders-are-good-at-trading https://www.bloom

Matt Levine had a pretty good column on this the other day: https://www.bloomberg.com/opinion/articles/2021-09-29/insiders-are-good-at-trading https://www.bloomberg.com/opinion/articles/2021-09-29/inside... His point, which is pretty much impossible to argue with, is that insiders always have material nonpublic information about the companies they work for, so treating “insider trading” as a categorical evil that must be totally eliminated is just denying reality. You would have to bar insiders from ever trading their own stock under any circumstances, which seems silly. The alternative view is basically “who cares”, and that barring insiders from trading freely actually impedes efficient price discovery. A compromise might be to require insiders to at least publicly disclose all trades, so that markets know when insiders are making moves.

JumpCrisscross 5y ago
Simple solution seems to be a forced delay between placing an order and it executing. So if an insider wants to sell, they place a binding order today and then it executes after N days or weeks.
- agumonkey 5y ago
  Ah, interesting. Batching orders would indeed change the dynamics
mthoms 5y ago
>You would have to bar insiders from ever trading their own stock under any circumstances, which seems silly. Why is it silly? It seems perfectly reasonable to me. There are 10's of thousands of other stocks to trade.
- pgodzin 5y ago
  Because an equity stake is a huge percentage of compensation for a company, and it's much easier to give shares of the company rather than cash. And those receiving shares should be able to sell it.
  - wtallis 5y ago
    I agree that the strictest regulations against insider trading would effectively make equity compensation impossible. But you're basically saying that it shouldn't be outlawed because it's currently legal, and currently practiced. If either of those were not true, then outlawing it couldn't be on the table to begin with. This feels like you're begging the question, or that you left off a step or two at the end and stopped a bit short of a complete argument. Maybe something about equity compensation being a valuable tool that can provide a beneficial incentive structure that is not easily achieved through other means?

JumpCrisscross 5y ago

Simple solution seems to be a forced delay between placing an order and it executing. So if an insider wants to sell, they place a binding order today and then it executes after N days or weeks.

agumonkey 5y ago
Ah, interesting. Batching orders would indeed change the dynamics

mthoms 5y ago

>You would have to bar insiders from ever trading their own stock under any circumstances, which seems silly. Why is it silly? It seems perfectly reasonable to me. There are 10's of thousands of other stocks to trade.

pgodzin 5y ago
Because an equity stake is a huge percentage of compensation for a company, and it's much easier to give shares of the company rather than cash. And those receiving shares should be able to sell it.
- wtallis 5y ago
  I agree that the strictest regulations against insider trading would effectively make equity compensation impossible. But you're basically saying that it shouldn't be outlawed because it's currently legal, and currently practiced. If either of those were not true, then outlawing it couldn't be on the table to begin with. This feels like you're begging the question, or that you left off a step or two at the end and stopped a bit short of a complete argument. Maybe something about equity compensation being a valuable tool that can provide a beneficial incentive structure that is not easily achieved through other means?