Other countrieshave gradually followed the U.S. Overthe last three decades, however, a complex federal prohibition of insider tradingemerged as a central feature of modern U.S. In the United States, early common law permittedinsiders to trade in a firm's stock without disclosure of inside information. The law of insider trading is one way society allocates the property rights toinformation produced by a firm. Keywords: Property Rights, Securities Regulation, Insider Trading, SecuritiesFraud. Instead, the economic argument in favor of mandatoryinsider trading prohibitions has typically rested on some variant of theeconomics of property rights in information.

The argument in favor of regulating insider trading traditionally wasbased on fairness, which predictably has had little traction in the law andeconomics community. Public choiceanalysis is also a staple of the deregulatory literature, arguing that the insidertrading prohibition benefits market professionals and managers rather thaninvestors. Another set of law and economics scholars, incontrast, contends that the property right to inside information should beassigned to the corporation and not subject to contractual reassignment.Deregulatory arguments are typically premised on the claims that insider tradingpromotes market efficiency or that assigning the property right to insideinformation to managers is an efficient compensation scheme. One set of scholars favorsderegulation of insider trading, allowing corporations to set their own insidertrading policies by contract. Insider trading is one of the most controversial aspects of securities regulation,even among the law and economics community. Some Suggestions for Further Empirical Research How Should Insider Trading be Regulated?Ģ4. Insider Trading as Theft: A Property Rights AnalysisĢ3. Does Insider Trading Undermine Investor Confidence?Ģ0.

Does Insider Trading Injure Investors?ġ4. Insider Trading as Entrepreneurial Compensationġ3. Insider Trading as an Efficient Compensation SchemeĨ. The Effect of Insider Trading on the Price of Securitiesħ.

Go pro insider trading