Desertrat
Mar 12, 2004, 02:48 PM
Ran across some thoughts on the subject; not my own, but I pretty much agree with some of the notions.
Hokay: Who was hurt by Martha Stewart's insider-knowledge sale? Who lost money as a result of her action?
ImClone stock was gonna go down, on the news that the FDA hadn't given approval to the new product. Stewart didn't cause that. And, her sale was of not enough shares to affect the market. Further, ImClone stock has recovered some of it's losses, so ImClone stockholders certainly weren't hurt by her action.
As a result of the laws against insider trading, the prosecution of Stewart has caused the value of her company's stock to fall. Sure, one could say that her breaking the law led to this devaluation, but Stewart's stockholders were hurt by the fact of prosecution.
The question raised, then, is why is insider trading against the law? In this case, the law did more harm than good.
Note that purchases and sales of stock by those considered to be Insiders are listed as public knowledge. Thus, why should those who have separate access to inside knowledge about a company's condition be disallowed from using it? Any CEO can sell his stock at any time that he thinks he should bail out of the holding.
Has not the stock market long been a place of "caveat emptor"? Is it not historic that all companies try to make themselves look good on paper? Is it a place as secure as your local bank insofar as a safe place to "park money"? Is there no individual responsibility to know in reasonable detail as to the condition of a company whose stock one contemplates purchasing? The answers to these sorts of questions lead to the larger question about the legality or illegality of using inside knowledge...
:), 'Rat
Hokay: Who was hurt by Martha Stewart's insider-knowledge sale? Who lost money as a result of her action?
ImClone stock was gonna go down, on the news that the FDA hadn't given approval to the new product. Stewart didn't cause that. And, her sale was of not enough shares to affect the market. Further, ImClone stock has recovered some of it's losses, so ImClone stockholders certainly weren't hurt by her action.
As a result of the laws against insider trading, the prosecution of Stewart has caused the value of her company's stock to fall. Sure, one could say that her breaking the law led to this devaluation, but Stewart's stockholders were hurt by the fact of prosecution.
The question raised, then, is why is insider trading against the law? In this case, the law did more harm than good.
Note that purchases and sales of stock by those considered to be Insiders are listed as public knowledge. Thus, why should those who have separate access to inside knowledge about a company's condition be disallowed from using it? Any CEO can sell his stock at any time that he thinks he should bail out of the holding.
Has not the stock market long been a place of "caveat emptor"? Is it not historic that all companies try to make themselves look good on paper? Is it a place as secure as your local bank insofar as a safe place to "park money"? Is there no individual responsibility to know in reasonable detail as to the condition of a company whose stock one contemplates purchasing? The answers to these sorts of questions lead to the larger question about the legality or illegality of using inside knowledge...
:), 'Rat
