First Martha and now Raj and Rajat. Insider Trading laws were passed a very long time ago to protect the investor or was that the real intention? Could one not argue that Insider Trading laws prevent information leakage so that the real insiders CAN make money without the small investor being involved? In the age of Wikileaks, can we really contain information or judge its use? Should we try?
Okay, here is another way to look at it. Say there was a car race from LA to NY and first 12 people to reach would get a $1M bucks each but driving over 55mph and getting caught could land you in jail. If those where the rules, why would a small group the 12 NOT conspire with the Highway Patrol to take out all potential winners?
Conspiring with Highway Patrol involves a lesser risk with same returns compared to driving over 55mph. Could the SEC be the highway patrol and Goldman the conspiring gang?
The real question is this. Does it make sense to enforce laws with such intensity on a few people for something that most people are suspected of doing? Ticketing a bunch people makes sense because the penalty is on a curve. The more people break the law, the more people get tickets. But, is that true when it comes Insider trading? Or is it more like, most people break the law it but few people pay severely. Is that control by fear? Are those the breeding grounds for corruption at the core?
I think the even bigger question is this: Are insider trading laws valid in upholding their intent to protect the average investor in the information age?