Insider Trading in Commodities Markets

54 Pages Posted: 23 Feb 2015 Last revised: 21 Apr 2016

See all articles by Andrew Verstein

Andrew Verstein

University of California, Los Angeles (UCLA) - School of Law

Date Written: March 19, 2016


In securities markets, insider trading is a crime. In commodities, insider trading is almost completely legal. This divergent treatment has long been accepted as appropriate, given perceived differences between the markets. For example, it has been thought that futures traders are sophisticated enough to neither need nor want protections from informed traders, and that the assets traded – corn, copper – do not lend themselves to insider trading anyway.

This Article disagrees, showing that purported differences between these two markets do not withstand serious scrutiny, and that insider trading is harmful in the same ways in both markets and should be governed by the same restrictions. Understanding securities and commodities markets to be peer financial markets permits for the first time a serious dialogue between scholars of both fields, and this Article takes the first steps to applying theories from the securities literature to commodities markets and holding those theories up for verification or falsification against new data from commodities markets.

Keywords: Insider Trading, commodities, futures, prices, derivatives, securities, informed trading, LIBOR, SEC, swaps, misappropriation, CFTC

Suggested Citation

Verstein, Andrew, Insider Trading in Commodities Markets (March 19, 2016). Virginia Law Review, Vol. 102, 2016 , Wake Forest Univ. Legal Studies Paper No. 2568140, Available at SSRN: or

Andrew Verstein (Contact Author)

University of California, Los Angeles (UCLA) - School of Law ( email )

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