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Thoughts from San Diego on Law, Politics, and Culture
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October 07, 2003
Insider Trading -- It's a Good Thing By Tom Smith It's that time of year again when law students are looking for supervisors for their law review comments, papers, etc. As the professor who can't say no, I have a large number of students eagerly scribbling away, and probably because of Martha Stewart, insider trading is once again a popular topic. Personally, I really hate insider trading laws. The law itself is an embarrassing, incoherent mess, as Daniel Fischel captured well in his book about Michael Milken, Payback. Many law professors seem to find the prospect of insiders making money on information professors have no access to particularly outrageous, and there is no end to academic proposals to stop the "abuses." My thought today on insider trading is this--I wonder whether a robust insider trading market would have made it harder for managers at Enron, Tyco, etc. to pull off their accounting shenanigans, which really were wicked and harmful to shareholders. Wouldn't information about bogus off-shore corporations hiding losses, etc., tend to leak out to the market much faster if it were legal for insiders to place bets on it not remaining secret forever? You would be pitting private greed against private greed, surely more effective than the SEC. By the way, about Martha Stewart, try this tip for peeling kiwis. Normally when you peel this tasty fruit, half of it ends up going down the disposal. Instead of peeling it with knife like a peach, try cutting it in half then scooping out the flesh as you would a soft boiled egg! It really works! It would be wrong to put such a clever woman in prison. |