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Modern society would collapse if insider trading was legal. It would about as well as making bribery legal.

by Drakim 5y ago

cbg0 5y ago
> It would about as well as making bribery legal. You mean like how lobbying is legal in the US?
- jjoonathan 5y ago
  We don't just have a system of legalized bribery, we have a system of mandatory bribery. Campaign finance says: haven't collected your bribe quota from well-heeled causes? No public office for you. Nice.
- novotionworepr 5y ago
  Lobbying in the US is not the same as bribery. It's a system that has become corrupted, but corruption is not the system's main purpose. Ostensibly, lobbyists exist to inform legislative staff about issues which they have no experience with, like an expert witness. You can't expect all ~550 legislators to have an in-depth understanding of every topic that they vote on. The problem is that our legislative staffs started letting lobbyists come to them, instead of seeking out reliable impartial groups to work with. So when they need information about an upcoming vote, they end up soliciting advice from the wealthiest groups in those industries which the vote would impact. It's an insidious form of regulatory capture. It might even be worse than bribery, because ordinary citizens cannot participate.
TheGigaChad 5y ago
logicchains 5y ago
That's absurd. Insider trading makes markets more efficient as the information enters the market earlier, allowing them to reach the correct price sooner. There's no insider trading laws in commodities or real estate, have those markets collapsed?
- lexapro 5y ago
  Who would invest in a company if senior management is allowed to steal from investors? You might as well legalize stealing. Markets need trust.
- cool_dude85 5y ago
  >There's no insider trading laws in commodities or real estate, have those markets collapsed? I didn't check, but is this really true? If a mining company executive knows that for whatever reason they will see a 10% drop in yield next quarter, but it's not public knowledge, they can buy futures, no problem? All the execs can get together if there's something going on and invest on that info as long as they're investing in the commodity, not stock?
- tsimionescu 5y ago
  > Insider trading makes markets more efficient as the information enters the market earlier, allowing them to reach the correct price sooner. How exactly do you think this happens? If I know that a stock is about to rise significantly, I can just buy it at the current price all the way up to the day the information becomes public, and I will not have changed its price at all, but will profit massively off of my inside information. The market will not reach the correct price until material information becomes public.
  - rosndo 5y ago
    > and I will not have changed its price at all Of course you will have, buying affects the price.
    - tsimionescu 5y ago
      Marginally, but nowhere near to the extent that the price will change when the insider infortmation becomes public (unless I'm doing something crazy, like buying all available stock at any price below what I think the price will be).
      - 5y ago

Modern society would collapse if insider trading was legal. It would about as well as making bribery legal.

by Drakim 5y ago

Modern society would collapse if insider trading was legal. It would about as well as making bribery legal.

cbg0 5y ago

> It would about as well as making bribery legal. You mean like how lobbying is legal in the US?

jjoonathan 5y ago
We don't just have a system of legalized bribery, we have a system of mandatory bribery. Campaign finance says: haven't collected your bribe quota from well-heeled causes? No public office for you. Nice.
novotionworepr 5y ago
Lobbying in the US is not the same as bribery. It's a system that has become corrupted, but corruption is not the system's main purpose. Ostensibly, lobbyists exist to inform legislative staff about issues which they have no experience with, like an expert witness. You can't expect all ~550 legislators to have an in-depth understanding of every topic that they vote on. The problem is that our legislative staffs started letting lobbyists come to them, instead of seeking out reliable impartial groups to work with. So when they need information about an upcoming vote, they end up soliciting advice from the wealthiest groups in those industries which the vote would impact. It's an insidious form of regulatory capture. It might even be worse than bribery, because ordinary citizens cannot participate.

TheGigaChad 5y ago

logicchains 5y ago

That's absurd. Insider trading makes markets more efficient as the information enters the market earlier, allowing them to reach the correct price sooner. There's no insider trading laws in commodities or real estate, have those markets collapsed?

lexapro 5y ago
Who would invest in a company if senior management is allowed to steal from investors? You might as well legalize stealing. Markets need trust.
cool_dude85 5y ago
>There's no insider trading laws in commodities or real estate, have those markets collapsed? I didn't check, but is this really true? If a mining company executive knows that for whatever reason they will see a 10% drop in yield next quarter, but it's not public knowledge, they can buy futures, no problem? All the execs can get together if there's something going on and invest on that info as long as they're investing in the commodity, not stock?
tsimionescu 5y ago
> Insider trading makes markets more efficient as the information enters the market earlier, allowing them to reach the correct price sooner. How exactly do you think this happens? If I know that a stock is about to rise significantly, I can just buy it at the current price all the way up to the day the information becomes public, and I will not have changed its price at all, but will profit massively off of my inside information. The market will not reach the correct price until material information becomes public.
- rosndo 5y ago
  > and I will not have changed its price at all Of course you will have, buying affects the price.
  - tsimionescu 5y ago
    Marginally, but nowhere near to the extent that the price will change when the insider infortmation becomes public (unless I'm doing something crazy, like buying all available stock at any price below what I think the price will be).
    - 5y ago