Doug: The SEC is concerned with the enforcement of a set of stupid, counterproductive, expensive, completely unnecessary, and destructive laws. It does so by having its bureaucracy create a myriad of even more stupid, counterproductive, expensive, completely unnecessary, and destructive regulations.
L: But you’d say that about all government law.
Doug: I would, actually, although I know that confuses some people because there is an overlap between government law and what might be called natural law. But this one is topical at the moment, and worth debunking here and now, even though by this time next week people will have totally forgotten that the guy has been locked away for years… along with about 2.2 million others now in American prisons – most of whom absolutely shouldn’t be there.
So… where to begin?
Doug: With a definition, as always. The SEC’s definition of insider trading is constantly evolving and growing, though the definition itself – forget about its application – is imprecise and arbitrary. But, more or less, it says that any officer, director, holder of more than 10% of a public company’s stock, or anyone they talk to about material information regarding the company, is an insider.
Like most of the SEC’s rules, the ones on insider trading are arbitrary. They’re similar to the tax laws, in that you often can’t know whether you’re breaking them or not. You’d almost have to live with a specialized attorney to keep from getting in trouble. They can’t be enforced in anything but a sporadic way – basically to cause fear, in the hope that fear will keep the plebes in line. But worse, they are unnecessary and destructive.-Doug Casey on Insider Trading