Who loses from insider trading? Mostly richer people than the inside traders - e.g. institutional investors rather than the well-positioned individual. That's why it's prosecuted. And also to maintain the appearance of "fairness" - the whole racket is justified by identifying bad apples, leaving a presumably purified system.
Doug
Michael Perelman wrote:
Sabri's article on insider trading was humorous. Economists have been trying to justify the practice for a while, including my freshman econ. prof., Harold Demsetz.
You might also enjoy
Maremont, Mark and John Hechinger. 2001. "Fifty Corporate Insiders Bailed Out Before the Slump and Made a Mint." Wall Street Journal (22 March):
-- Michael Perelman Economics Department California State University Chico, CA 95929
Tel. 530-898-5321 E-Mail michael@xxxxxxxxxxxxxxxxx
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