Academic Insider Trading

Abstract

Traditional antifraud theory presumes insider trading (IT) undermines financial market confidence expectations that investors play at a “fair game.” Losses sustained by shareholders ignorant of valuable secret, non-public information reveal a rigged game raising society’s capital costs. Public policy increasingly recognizes other harms: fiduciary breach incentives, subverted confidentiality, and injuries outside financial markets. Renewed IT interest compels reevaluation of justifications for IT’s restriction. The STOCK Act restricting Congressional IT and government intelligence consultancies converges with scrutiny of expert networks populated with academics into a generalizable understanding of insider hazards, thereby suggesting commonalities among all forms of insider threat.