Insider trading and (probably) how to get away with it

The year 2014 had events that somehow registered but did not stick.  The December court decision in NY  reversing the conviction Todd Newman and Anthony Chiasson, essentially transformed the meaning of insider trading. (see below)

EXAGGERATION ALERT: The Newman decision could be for insider trading; an equivalent to the Citizen’s United decision for campaign contribution.

But first a word for our politically connected industry. The easiest way to do insider trading is to work with and for people around government .  The STOCK act provisions in 2012-2013 did indeed declare insider trading by congressional members and staff illegal, but hard to enforce.  And the rest of the industry (read lobbyists) is not included.

What do these two events have in common?  Under both situations, for professional traders and for professional politicians and lobbyists, if one person has insider information but instead of trading for themselves they pass the information to a third party (who trades) this is not considered insider trading. In a moment of poor humor it is reminiscent of elementary school ‘who pushed in the drinking fountain line’ arguments.  The benefit to the trading party (and the public cost) is generated by another.

No wonder there are calls for the legalization of insider trading.  Among those knowledgeable, and aided by technology, the possibility to trade efficiently on insider knowledge at the highest levels is already in place.  Aside from the ’60 minutes’ piece in 2012, nobody cares.