2 ms·
Is it a transfer of income, or a genuine loss of resources? It seems like the losses to everyone else are offset one to one by the gains to the insider traders.
by savanaly 12y ago
Is it a transfer of income, or a genuine loss of resources? It seems like the losses to everyone else are offset one to one by the gains to the insider traders.
- notahacker 12y agoIt's not a zero-sum game if the effects are a disincentive to invest on the part of parties without strong connections to insiders.
- cma 12y agoYes, a transfer. What I meant by other parties/counterparties is that a sale that went to an insider might instead go to the next highest bidder, and the gains once the good earnings news was released would go to him or her. Or the absence of the insider might mean the bid never goes high enough and the seller stays with the shares, to later make the gain. Zero sum, but basically all the normal market participants are avoiding a "presence of an insider" tax when insider trading can be curtailed.