trbdavies writes: As the Galleon Group insider trading case moves toward a trial, John Tamny at Forbes.com makes a pretty good argument that laws against insider trading are incoherent, and offers a full-blown "defense of the much-maligned practice". It does seem puzzling what the main principle should be here. As Tamny says, "information asymmetry is what makes investing a worthwhile pursuit to begin with. If everyone had access to the same information, there would be little opportunity for gain when investing." A better approach might be to require more detailed and immediate disclosure of every trade, which seems like it would drastically limit the timeframe and magnitude of insider deals. The methods used in the Galleon case also raise questions about whether future enforcement is really viable. The case against Raj Rajaratnam and 5 others is based on wiretapping evidence with cooperating witnesses — the first time such evidence has been used in an insider trading case, a la cases against the mafia. It seems very likely, now that everyone is aware of the possibility of such wiretaps, that future inside information will simply not be passed by cell phone, but through less tappable backchannels or even steganography. How is the FBI going to detect that two people are passing messages to each other by rearranging the stones along a hillside trail?
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