Warren Buffett No. 2′s “Inside Trade” Wasn’t Illegal
finance.yahoo.com
finance.yahoo.com
1) "didn't hurt anyone": Sokol learned about Lubrizol while on his duties at Berkshire. After all, that's what Berkshire pays him for, to research interesting investment opportunities. By buying before Berkshire, he front-runned the firm using Berkshire's private information (aka, what he knew as #2 in the firm).
2) "trading laws should be abolished... insider trading helps.. individual investors" There are some academics that think so, but the academic consensus is in the other way. For instance, several studies have shown that on the days were insider trading is less likely to ocurr, bid-ask spreads are lower.
The bid-ask spread paper: "the black period is associated with a bid-ask spread narrower by about 2 bps"
http://scholar.google.com/scholar?q=related:bZ0CEWMhg4YJ:sch...
http://www.cib.espol.edu.ec/Digipath/D_Papers/38570.pdf
Another well cited but controversial paper:
http://foba.lakeheadu.ca/gradojevic/5079/meulbroek(1992)_ins...
http://scholar.google.com/scholar?cites=3127308622037385070&...
From those two, you can build your way up to the more current papers using the "Cited by" feature. For more quality, focus on papers written on the more known journals (eg: journal of finance, journal of financial economcs, RFS, and so on).
Also, see the 1997 SCOTUS ruling on insider trading:
http://en.wikipedia.org/wiki/Insider_trading#Court_decisions
http://www.law.cornell.edu/supct/html/96-842.ZO.html
IANAL, but their "misappropiation" argument can arguably apply in this case.
Cheers
> Tamny believes that insider trading laws should be abolished, on the grounds that they are vague and inconsistent. Tamny also believes that insider trading helps, rather than hurts, individual investors, because it results in information more quickly being factored into stock prices.
There's no argument here for why Sokol's actions don't constitute insider trading, and there's only a conclusory statement that they didn't harm anyone. I don't really see why it wouldn't be considered insider trading, and I think there's a good argument that he's breached his duty of loyalty to Berkshire.