Insider Trading - Should It Be Legalized?

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Insider Trading
Should it be legalized?

An objective look at the different arguments given by each side of the controversial topic of whether insider trading should continue to be illegal or not. Also included is a subjective view of the author’s stance on the subject.
Insider Trading
Should it be legalized?

An objective look at the different arguments given by each side of the controversial topic of whether insider trading should continue to be illegal or not. Also included is a subjective view of the author’s stance on the subject.
Mariah Frahm
2/24/2013
Mariah Frahm
2/24/2013

Table of Contents Introduction 2 Arguments For 2 Market Efficiency 2 Proprietary Research vs. Insider Information 3 Victimless Crime 3
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So if the market isn’t affected by which way you obtain the information, why is one way illegal and the other legal when it is the exact same information?
For example, if I overheard a conversation by a CEO (or even if the CEO told me directly) revealing a morsel of information pertaining to their business that had not become available to the public yet, that would be an illegal piece of information to trade on. On the other hand, if I went to that CEO’s business every day and interviewed their customers or managers and my efforts turned up the same information, that information would be absolutely legal to trade on because it was the product of research even though it is the same exact information that was obtained by the CEO in the first place.
Victimless Crime
There is no guarantee that there is always a victim of insider trading, more often than not, there is actually no victim at all. When a person trades on the market, whether using legally obtained information or illegally obtained information, they have no idea who is on the receiving end of their trade. That person trading does not in any way have a direct impact on other people and whether or not they are interested in buying or selling and that does not matter whether it is legally obtained information or illegally obtained information or whether the trading party profits or loses. The person who is initiating the trade is solely doing it
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