There is less hype and they are also not affected as much as US if stock goes down or stays flat.
If you just want to invest money, there is real estate or investing in a family member’s business. Pensions and other institutions in need of safe (in aggregate) investments won’t go near the SSE yet.
China is doing more things right but still has a long way to go on other things.
What does that mean?
Insider trading is good for the function of the market: it makes sure information is reflected in prices sooner, benefiting the general public.
> Like, you could wager some money on a mahjong game, or you could blindly pick a stock and hope you can get some money by riding in the wake of a connected insider trader.
If you are a clueless retail investor, buy a low cost index fund. Why would you be picking stocks?
Current insider trading laws are about _preventing_ it (but it still happens). This makes it so that insiders who do trade and get away with it make bank, but this does little to benefit the over all market information equilibrium.
What needs to make insider trading "good" (instead of bad), is to make the insider's trades 100% transparent and instant (instead of the months of SEC filing currently needed before it becomes public info). Doing this will ensure that insider's trades immediately gets reflected and copied/arbitraged against, and will allow the price of a stock to reflect information not yet released but is acted upon by insiders.
In any case, I'm not making some innovative new argument or hot take. This is pretty standard, orthodox academic stuff. See eg https://en.wikipedia.org/wiki/Insider_trading#Arguments_for_...
What's an Epstein? Is that some other company you don't like?
When Warren Buffett decides that he wants to buy stock in a company, he knows that if this became public, the target company's stock would go up. Nevertheless, he's allowed to trade on this insider information (about himself!) without informing the general public first.
> You need to take your insider trading again (every bigcorp makes you do it) and learn what insider trading actually is, and why it is illegal, and why you’ll probably get caught. I’ve heard too many sad stories where immigrants from a country with looser laws came to the USA for very high paying tech jobs, and throw them away for just $100k of insider trading gains.
That's true but also entirely irrelevant to my point: in these cases the company does not consent to the employee using the information. And, yes, that's illegal.
Insider trading law in the US is about breaching fiduciary duty. If the company consents, there's no fiduciary duty that was broken. (But the conditions are more complicated. So let's go with the simpler example of a company trading on its own secret, insider information.
It's a fun little legal Gedankenexperiment to craft the conditions that make what would otherwise be insider trading legal in the US. But as you suggest, it's not very relevant in practice, because they all require the company's consent, which you normally don't get. Matt Levine sometimes likes to write about these sorts of things in his 'Money Stuff' newsletter.)
Don't know how you got this from Matt Levine. Isn't his catchphrase "Everything is securities fraud"?
No, no, you can still construct scenarios where it's legal. But yes, buybacks are especially heavily regulated. And yes, you have a fiduciary duty to shareholders. (But not to the 'integrity of the market'. There might be some duties and vague laws there, but it's not a fiduciary duty.)
In any case, what specifically are you referring to that's "clearly not true" in my comment? I constructed some examples that deliberately avoid a company (or an employee of said company) buying their own stock.
> Don't know how you got this from Matt Levine. Isn't his catchphrase "Everything is securities fraud"?
He has more than one catch phrase. The relevant one here is that insider trading in American law is about misappropriating information and fiduciary duty. Which he contrasts to French law amongst others, which is about fairness and a level playing field.
However, regulators in the US often want to spin the rules to be about fairness, but courts so far mostly disagree.
One example he brought up was: suppose you work for Bank X and you take the train in the morning to work. You overhear an employee of Bank Y talking about some deal on the phone (and that other guy doesn't notice you). You have no fiduciary duty to Bank Y.
By French law, you couldn't trade on the information you gained.
But by American (and UK law, where the example was from) your fiduciary duty to your employer, Bank X, might even compel you to use the information to their advantage. Especially if you were on company time when you overheard the conversation.
The company ultimately being the shareholders. Hard to imagine a scenario where allowing an employee to trade on insider information would benefit the shareholders.
Paying people in secrets isn't different in principle, only in degree.
However I agree that the scenarios where this would be useful to shareholders would be a bit weird, but it's just a Gedankenexperiment where we assume that for some reason the shareholders already think this is a good idea.
> When Warren Buffett decides that he wants to buy stock in a company, he knows that if this became public, the target company's stock would go up.
Warren Buffett is not a publicly traded company, and in this hypothetical he is buying stock in another company, which (by assumption) he has no insider information about.
> Insider trading law in the US is about breaching fiduciary duty.
This is false. It's about protecting traders. This is why it applies specifically to publicly traded companies. If it was about protecting shareholders (from what?) then it would apply to all companies.
No, that's not true in US law. It doesn't have to be the stock of the company you work for to get you into insider trading trouble.
> Warren Buffett is not a publicly traded company, and in this hypothetical he is buying stock in another company, which (by assumption) he has no insider information about.
Well, that's why your definition is wrong.
> If it was about protecting shareholders (from what?) then it would apply to all companies.
Huh, what? You don't have a fiduciary duty to people you don't work for.
See https://en.wikipedia.org/wiki/Insider_trading#Misappropriati...
Well, there you go. Any more questions?
Trading while having more information than someone else is perfectly legal.