5/23/2007

Legalise insider trading

A letter from a Charles Tan in the Today paper suggested that insider trading should be legalised. There is nothing for me say when people cannot see what this will lead to. But this is another brutal truth. When one is in a position of power or authority and accessible to sensitve information, connections etc, it is ok to take advantage of the situation to fatten one's pocket. Are we ready for the Singapore of the future?

3 comments:

Matilah_Singapura said...

Not "legslised" but to be a little more precise — "decriminalised".

One more silly law can be struck off the books.

How to protect against insider trading then?

Simple. By CONTRACT.

e.g. Execs, underwriters, etc... people who have an "information" advantage will be asked to sign a contract upon hiring their services that they will not trade stock with fore knowledge before that knowledge is made publically available. You then list the penalty if they breach the agreement.

So let's say, they breach the agreement, and the penalty is a financial sum, plus their services are terminated immediately, and announced publically.

Now...

think.. with a record like that, who is going to hire them at another job?

Public condemnation and ostracisation is powerful, especially when it affects one's economic means.

redbean said...

your position is that privilege info cannot be exploited to one's advantage.

charles position is that there is nothing wrong with that as everyone is doing it.

Matilah_Singapura said...

Well I won't quibble with you on definitions. My understanding is that insider trading is only possible if one is privy to certain types of information.

Thus by definition, it is impossible for the member of the general public to engage in insider training.