A Middle Ground on Insider Trading

6 Pages Posted: 12 Jan 2010  

Thomas A. Lambert

University of Missouri - School of Law

Date Written: January 11, 2010

Abstract

The debate over insider trading usually proceeds in all-or-nothing terms: either all insider trading should be permitted by law or none should. This article argues that the law should permit insider trading that decreases the price of an overvalued security or equity, but should prohibit insider trading that would increase that price. The reason for the different treatments is that over-valued equities often have a long-term negative effect on shareholders while the long-term effect on undervalued equities is ambiguous.

Suggested Citation

Lambert, Thomas A., A Middle Ground on Insider Trading (January 11, 2010). Regulation, pp. 44-49, Winter 2009-2010. Available at SSRN: https://ssrn.com/abstract=1534716

Thomas Andrew Lambert (Contact Author)

University of Missouri - School of Law ( email )

Missouri Avenue & Conley Avenue
Columbia, MO 65211
United States

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