In a book published in 1966, economist Henry Manne showed how insider trading actually makes markets more efficient because it speeds information that's immediately reflected in share prices. That's what we want from markets: a quick response to reality. In most other markets -- art, for instance, or cattle trading -- it is perfectly fine for one party to have inside information that the other does not. Prices ultimately reflect those facts, and prices are the way the public gleans knowledge. Still, though I think the SEC's desire for a level playing field is public-relations hokum and bad economics, I would not go so far as Manne. If investors think that an unscrupulous management is profiting from inside information, they may be reluctant to invest in the first place. Fine, but why go after a recipient like Stewart? Unlike even Chiarella or Dirks, she was by no stretch of the imagination an insider or a trusted fiduciary.
