"It was Halloween on Thursday, so let’s meet a frightening ghoul who haunts our financial markets: the insider trader. The Halloween metaphor is not mine but that of economist Donald Boudreaux, who asks if the insider trader is a genuinely dangerous monster or a comical apparition in a fright mask, fit only for the scaring of children."
This is a summary of the reasons why insider trading should not be illegal according to Prof. Boudreaux:
- despite intensive monitoring, it’s hard to detect and even harder to prove. People with inside information can profit by not taking action and that is undetectable.
- market prices are supposed to reflect all available information, the better to allocate capital and insider trades simply accelerate the process.
- insider trading is a crime without a victim