The Lost History of Insider Trading

54 Pages Posted: 11 Jan 2018 Last revised: 26 Mar 2018

See all articles by Michael Perino

Michael Perino

St. John's University - School of Law

Date Written: January 10, 2018


Common conceptions about the history of insider trading norms in the United States are inaccurate and incomplete. In his landmark 1966 book Insider Trading and the Stock Market, Dean Henry Manne depicted a world in which insider trading was both widespread and universally accepted. It was SEC enforcement efforts in the early 1960s, he contended, that swayed public opinion to condemn what had previously been considered a natural and unobjectionable market feature. For five decades, the legal academy has largely accepted Manne’s historical description and the vigorous debates over whether the federal government should prosecute insider trading have assumed, either explicitly or implicitly, the accuracy of those views. This paper challenges that conventional wisdom and shows that the shift in insider trading norms began earlier than has previously been supposed and substantially preceded governmental enforcement efforts. Insider trading, while generally believed to be ubiquitous in turn-of-the-century stock markets, was not universally condoned. In fact, the propriety of the practice at publicly traded companies was highly contested. Those debates coincided with the growth of public companies and an ongoing shift in views about how the stock market functioned. The early twentieth century debate over insider trading thus featured both modern arguments about property rights in information and the effect that insider trading has on stock market participation and older ideas about manipulation and market inefficiency that would generally not be accepted today.

Keywords: Insider trading, Rule 10b-5, Henry Manne, securities law, history, norms

JEL Classification: B15, G14, K22, N21

Suggested Citation

Perino, Michael, The Lost History of Insider Trading (January 10, 2018). University of Illinois Law Review, Forthcoming, St. John's Legal Studies Research Paper No. 18-002, Available at SSRN: or

Michael Perino (Contact Author)

St. John's University - School of Law ( email )

8000 Utopia Parkway
Jamaica, NY 11439
United States
718-990-1928 (Phone)
718-591-1855 (Fax)

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
PlumX Metrics