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> (albeit selectively in a way designed to maximise harm to people the insiders usually have some sort of fiduciary duty to). That doesn’t make any sense, pric
by prvit 4y ago
> (albeit selectively in a way designed to maximise harm to people the insiders usually have some sort of fiduciary duty to).
That doesn’t make any sense, prices go in both directions. If price goes up, there’s no harm to people who the insiders may have some fiduciary duty to.
> It also creates incentives for insiders to act perversely to profit from asymmetric information, including acting with the intent of creating less accurate pricing at a particular time in order to create trading opportunities for insiders.
In the US that’s just called “wire fraud” and not “insider trading”.
- notahacker 4y ago> That doesn’t make any sense, prices go in both directions. If price goes up, there’s no harm to people who the insiders may have some fiduciary duty to. Of course there is. When prices go up, insiders profit at the expense of shareholders who sell to them. In the absence of insider traders, non-insider shareholders collectively achieve better returns; ergo they are harmed by the presence of insider trading on positive or negative information. (The only time it wouldn't be the case is if the prices move in the opposite direction to the one the insiders are expecting due to some other unanticipated development which is far more significant than their information advantage) > In the US that’s just called “wire fraud” and not “insider trading”. Much easier to prove the insider trading in the run up to a profit warning than prove an entity was intentionally mismanaged to create that opportunity and its earlier predictions of success were fraudulent and not just incorrect.