Quote from Hydroblunt:
I'm sorry but after all this arguing are the proponents of the law completely OBLIVIOUS to the fact that IT DOES NOT WORK.
Insider trading is rampant today and almost accepted at the higher circles. All the law has done is prevent the mom & pop to use it.
I dunno why, but it's a bit obvious to me that the law is just an edge for the esoteric (Goldman Sachs, Congress & richest 1% comes to mind). Because if some critical info comes out, the law prevents the smaller guys to act on it. "Inside information" is not very difficult to get. People that work in the industry are privy to the information before the rest. It's common sense.
So let's bring up the IMCL example. Either way you look at it, it was gonna gap down hard. And I'm sure more than just the CEO knew about it. Had everyone been allowed to act on it, the decline would have been more obvious as the news disseminates through the market. And some, if not most, will be the last to sell and be bagholders. That's how it goes.
All the top brokers advise their richie rich clients on inside info that they get. This is a fact, if you have friends very well knowledgeable of the brokerage industry they will confirm this. They get away with it easily. Our Congress is so blatant about trading on inside info that it's pretty much accepted. Traders see it on a regular basis in the market, at times it's so obvious but nothing ever happens.
The CEOs and insiders will always tell half truths, at times blatant lies. They will trade on that, the law has changed little about it. In R.O.S., the narrator clearly discusses this. His advice is basic: due diligence. If the CEO lies about the company doing great & selling his shares, while there is bad news pending, the issue is that he is lying. If there are bad news pending and as the information gets disseminated from the CEO to the rest of execs & employees, I see no issue with them selling the shares as long as they do not make misleading statements. The smart investors will take notice and do more research and sell shares. The dumber ones get to be bagholders waiting to be last ones to know what's going on. Seems normal to me.
You guys can throw tons of examples of how it is unethical and all that jazz and I get what you are saying cause that's the idealism of insider trading law. But take a realism approach at it, you gotta be insane to think that it is working. It creates a special edge for the priviliedged, and I reckon that was the true cause behind it, just like many other laws created by our wonderful SEC.
