BECAUSE IT’S CHEATING, THAT’S WHY
A post at the Cato Institute blog asks, why is insider trading illegal? It tells the story of what sounds like insider trading at its most benign: a former star ballplayer who just happened to find out from his CEO neighbor that the neighbor’s firm was about to be acquired by a giant corporation. The ballplayer bought some of the stock, and told others to do the same. He profited handsomely when he later sold the stock.
I claim no expertise whatsoever in securities law. It’s a very complicated are, inhabited by specialists. I will never dabble in it. But I can tell you the easy answer to the question posed by that Cato blog post: because it’s cheating. It’s profiting through knowledge that isn’t available to you and me, only to those whose neighbors happen to be CEOs.
The argument that it’s a case of “no harm, no foul” doesn’t cut it with me. If my team is stealing the opposing team’s signals, but we lose the game anyway, is the league going to let it slide? I don’t think so.
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