THE CASE FOR LEGALIZING INSIDER TRADING

Most jurisdictions around the world have laws prohibiting or regulating insider trading in some form. The United States has some of the strictest laws prohibiting illegal insider trading, and makes the most serious efforts to enforce these laws. For over 20 years a debate has raged on in the business, legal, economic communities over whether these laws should be changed and insider trading legalized. This article will analyze the arguments on both sides of the debates to show that insider trading should be legalized. The arguments for prohibiting insider trading are based on a false and naive sense of "fairness" and can be rejected after careful consideration. Contrary to public opinion, insider trading causes no real harm to investors of corporations. In fact, it actually benefits investors, corporations and society in several ways. Therefore, insider trading should be legalized.