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> Retail investors are less likely to make optimal investment decisions if they think that insiders are lurking around every corner. But the reality is that th

by rosndo 5y ago

> Retail investors are less likely to make optimal investment decisions if they think that insiders are lurking around every corner. But the reality is that there are insiders lurking around every corner. The argument is essentially that we should seek to actively mislead retail investors instead of simply acknowledging this fact. To me that feels dishonest.

woodruffw 5y ago
I think it would be dishonest to do so actively, which is why I try to acknowledge that the SEC's current ability to enforce insider trading laws is relatively weak and ineffective. I think it's my civic duty to not only inform others of that fact, but also to advocate for better enforcement.
- economist6373 5y ago
  Good enforcement is impossible. You can never meaningfully hinder insider trading, far too many people have access to insider information. They don’t have to make the trades themselves either. > I think it would be dishonest to do so actively That is what the government is doing via legislation.
  - deObfuscate 5y ago
    Good enforcement isnt impossible. Improbable, yes. Every trade has to be disclosed. There isn't a block-chain involved, but their is an e-paper trail. We are on a technology forum in a time where ten people could probably put together a domain model that tracks potential conflicts based on peoples trades, google contacts, and linkedin profile. And any person who traded on insider information in the past probably leaves a pattern.
    - economist6373 5y ago
      Fine, this feels needlessly pedantic but let me correct myself. Good enforcement is impossible without subjecting anybody trading stocks and everybody they know to a completely unprecedented level of surveillance. This would have to go far beyond the wildest Snowden revelations. Perhaps not completely impossible in theory, but absolutely infeasible in practice. Building such a system would also be likely to result in far greater chilling effects on the markets than insider trading ever could.
      - JumpCrisscross 5y ago
        > enforcement is impossible without subjecting anybody trading stocks and everybody they know to a completely unprecedented level of surveillance Why? Just look for a pattern of abnormal returns. (Hint: the SEC does this.) It's much easier to check for insider information after the fact than it is to profitably trade on it.
        economist9374 5y ago
        >(Hint: the SEC does this.) Does it work? (Hint: no) > It's much easier to check for insider information after the fact than it is to profitably trade on it. This is only true for the least sophisticated insider traders.
  - otterley 5y ago
    By that logic, we should never pass any laws because we can't perfectly enforce them.

by rosndo 5y ago

woodruffw 5y ago

I think it would be dishonest to do so actively, which is why I try to acknowledge that the SEC's current ability to enforce insider trading laws is relatively weak and ineffective. I think it's my civic duty to not only inform others of that fact, but also to advocate for better enforcement.

economist6373 5y ago
Good enforcement is impossible. You can never meaningfully hinder insider trading, far too many people have access to insider information. They don’t have to make the trades themselves either. > I think it would be dishonest to do so actively That is what the government is doing via legislation.
- deObfuscate 5y ago
  Good enforcement isnt impossible. Improbable, yes. Every trade has to be disclosed. There isn't a block-chain involved, but their is an e-paper trail. We are on a technology forum in a time where ten people could probably put together a domain model that tracks potential conflicts based on peoples trades, google contacts, and linkedin profile. And any person who traded on insider information in the past probably leaves a pattern.
  - economist6373 5y ago
    Fine, this feels needlessly pedantic but let me correct myself. Good enforcement is impossible without subjecting anybody trading stocks and everybody they know to a completely unprecedented level of surveillance. This would have to go far beyond the wildest Snowden revelations. Perhaps not completely impossible in theory, but absolutely infeasible in practice. Building such a system would also be likely to result in far greater chilling effects on the markets than insider trading ever could.
    - JumpCrisscross 5y ago
      > enforcement is impossible without subjecting anybody trading stocks and everybody they know to a completely unprecedented level of surveillance Why? Just look for a pattern of abnormal returns. (Hint: the SEC does this.) It's much easier to check for insider information after the fact than it is to profitably trade on it.
      - economist9374 5y ago
        >(Hint: the SEC does this.) Does it work? (Hint: no) > It's much easier to check for insider information after the fact than it is to profitably trade on it. This is only true for the least sophisticated insider traders.
- otterley 5y ago
  By that logic, we should never pass any laws because we can't perfectly enforce them.