In what may be one of the dumbest articles to grace the front page of CNBC’s website, a so-called author Carol Roth advocates for the legalization of insider trading. This piece of excrement was published here, but within, you’ll find a point by point rebuttal of this screed. Here’s a sneak peak “what I am saying is that it is time to do away with the laws against insider trading entirely.” Ms. Carol makes the following points which are followed by my common sense and fact-based rebuttals to each point:
I do want to clarify that my argument focuses on the legality of trading on insider information. It should be noted that I do also believe that those with access to information should ethically and morally respect confidentiality agreements and fiduciary duties with the companies where they are accessing the information, but that is a separate civil, not a criminal, matter.
- OK, so she clarifies that this should be solely a civil matter, not criminal. That doesn’t lessen the stupidity of this argument in any way. Should Bernie Madoff not be behind bars, but only have been sued for recovery of the funds he embezzled? This is moronic. I mean, where is the deterrent? It would be insider trading gone wild. If every executive, CFO and low-level admin or analyst with access to insider information prior to publication knew that the worst penalty they’d face is to simply return some or all of the ill-gotten gains they just cheated from the retail investing public, we’d see insider trading activity skyrocket. Sharing a cell with a large man named Bubba is much more of a deterrent. It works. While insider trading cases in the US make big headlines, if you think about the sheer number of major mergers and acquisitions, earnings beats and misses, material events that companies release to the public and more, it is truly remarkable how little we see insider trading, volatility prior to public announcements and options activity and the like.
Here’s where she touts how Insider Trading actually benefits us all. Oh thank you, may I have another!? WTF. Read on for a complete point by point takedown of: