What Are Some Main Arguments In Favor Of Legalizing Insider Trading

Section III: What are some main arguments in favor of legalizing insider trading? There are a few arguments that can be argued in favor of legalizing insider trading, these include that no one is actually harmed, it would discourage private individuals from doing private research, and promoting market equilibrium and efficiency. A major “virtue” based ethical argument is that insider trading actually doesn’t harm insiders or outsiders. This argument made by Larry Saylor is largely based on the fact that the seller (in this case an outsider) isn’t harmed by the buyer (the insider) because the seller will still receive a slightly higher price. The buyer is willing to pay a slightly inflated price over par because the insider knows he can make a higher profit due to the nonpublic information he knows. As a result, of this both parties to the sale are better off because they are both receiving more money in exchange for their stocks, the

Thomas Aquinas and applies his words to mean: “…insider has no moral duty to disclose that a price change will occur in the when the non-public information becomes publicly known,” (Saylor, 4). He further elaborates that the action isn’t unjust because no one is harmed, as was presented in the aforementioned scenario. He quotes to McGee and Block’s work to validate this. They assert: that: “…transaction is not fraudulent and the inside trader is not violating anyone’s property rights in information, there is nothing unethical about the practice,” (Saylor, 4). An interesting aspect to this argument is that it depends on the ability of the buyer to profit later on from the increase in price of the stock. However, no one is able to predict how the market will react to the news once the news goes public. The market could react the way the insider expects it to, however it may not. This is a risk that the insider has to bear in order to profit from the trade he wants to conduct with the