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Bridge over ocean
1 May 2004 Financial Analysts Journal Volume 60, Issue 3

Insider Trading: Two Comments

  1. Jack Treynor
  2. Dean LeBaron

Two old friends ruminate about insider trading. Treynor points out that the purposes of the U.S. insider trading laws are (1) to protect dealers and (2) to give investors the feeling that they are protected from people who know more than they do. He concludes that insider trading laws probably make capitalist societies healthier. LeBaron argues that when insiders are restricted, markets become less informed. He proposes that insider trading be encouraged at all times—but with the proviso that insiders be required to identify their market orders.

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