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Comment by refurb | Hacker News Reader

That’s why there are people talking about making it legal. The more people that trade on insider information, the more accurately the stock price reflects it.

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Great, but we are talking about a market where "inside" information is already legal.

Well, if you do a look back after a company makes a major public revelation, it’s common to see a lot of trades ahead of it, suggesting that there is a lot of insider trading anyways.

Sure, but that doesn’t mean it’s illegal. Finding some documents in a dumpster or overhearing a deal team drunk at a bar and then trading on it is perfectly fine. Generally there has to be some quid pro quo or deliberate knowledge on behalf of the insider that he’s giving you information for trading. Word goes around fast on trading desks and the vast majority are trading on legal or grey area information.

The government makes the laws intentionally vague so it’s really hard to tell.

Then it wouldn’t be “insider”, it would be public. The term insider designates that it’s non-public. If you make it public, then some new piece of information would become “insider” information that others don’t have. You can’t operate a business 100% transparently

Ops point being if enough people who know the inside information act on it then market price would reflect it. This would reduce the significance of the advantage.

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