Regulating information flows: Is it just? Insider trading and mandatory-disclosure rules from a free-market perspective

摘要

Much of Henry Manne’s work on insider trading emphasised that this practice enhances quick dissemination of information and ultimately efficiency. In this paper, we draw attention to the fact that regulating insider trading encroaches upon the foundations of a free-market economy, and boils down to a question of envy, rather than justice. In particular, there is nothing undesirable, fraudulent or shameful in a process through which selected agents (the insiders) transform dispersed information into specialised knowledge, and make use of it. One may be envious that insiders make a profit or avoid a loss thanks to their privileged position. Yet, insiders do not steal any information and do not violate any property right. Their only constraint is an explicit contractual agreement with their employer. In that case, the government might be required to enforce the contract. Regulation would be illegitimate.