Professor John P. Anderson’s article, What’s the Harm in Issuer-Licensed Insider Trading  argues that my “Law of Conservation of Securities” has no moral relevance to the question whether to allow such trading.
A stock market insider trade has two different classes of victims: those injured by the accompanying non-disclosure and those harmed by the transaction itself. The “Law of Conservation of Securities” identifies the individual(s) harmed by the insider trade itself, which is not necessarily the party on the other side.
To illustrate, suppose I sell 100 shares based on material nonpublic adverse information. If I had a pre-existing … Read more