{
  "id": 4464197,
  "title": "BUSINESS REFLECTION: Crossed Wires: A novel way to legalise insider trading",
  "url": "https://urgent.news/2026/08/30/business-reflection-crossed-wires-a-novel-way-to-legalise-insider",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-08-30T17:28:16.000Z",
  "source": {
    "name": "Daily Maverick",
    "slug": "daily-maverick",
    "url": "https://www.dailymaverick.co.za/article/2026-08-30-crossed-wires-a-novel-way-to-legalise-insider-trading/"
  },
  "original_language": "en",
  "account": "Inside this piece of writing is a proposal for a novel approach to addressing the issue of insider trading. The author suggests that the problem of insider trading may not be entirely eradicated, but it could be less damaging to the integrity and economic foundations of public stock market trading. The author, who once served on the board of a public company, recalls an incident where a colleague, albeit with good intentions, sold a few shares that were not legally permissible. While the act was small and did not cause significant harm, it highlights the potential for what starts as minor misconduct to escalate.\n\nThe laws surrounding insider trading, the author argues, are a result of legal fiction rather than reflecting human nature. These laws create an illusion that board directors are impervious to pressure, never discussing anything beyond routine matters. However, this assumption is far from reality. Information, especially material non-public information, does not remain stagnant; it spreads like a gas, infiltrating every corner of human gossip. Even an honest CFO may inadvertently disclose sensitive data, either knowingly or unknowingly, through conversations with family or acquaintances.\n\nCorporate compliance departments, blackouts, and legal scrutiny are all efforts to maintain compliance and prevent insider trading. However, the author points out that these measures are complex and extensive, and the leaks continue to occur. There are numerous examples of how information leaks, from laptops left unattended to conversations conducted at the volume of the mildly deaf, to IT contractors accessing embargoed announcements. Even the smallest breaches contribute to the continuous seepage of information throughout the entire system.\n\nThe author does not dismiss the importance of insider trading laws, as they do serve a purpose. They maintain the belief that markets function best when investors trust that they are participating in a fair game. The removal of this confidence could lead to a decrease in market participation and an increase in suspicion. However, the author also acknowledges the arguments of economists and libertarians who propose that making insider trading legal could lead to a self-regulating market. The idea is that if insiders are allowed to legally exploit privileged information, the market would quickly price it in, and the advantage would be eliminated.\n\nDespite the potential benefits of this approach, the author cautions against embracing it fully. A suboptimal and flawed law is still preferable to no law at all, as it can deter some misconduct. The threat of legal consequences, even if only occasionally enforced, can serve as a deterrent for some individuals. Nevertheless, the author expresses skepticism about the idea of legalizing insider trading, as it would create a world that most people find unappealing. A few individuals sent to prison each year may discourage others from engaging in such behavior, but the idea of a world where insider trading is legal and widely accepted remains unpalatable.",
  "summary": "There is a tantalising possible answer to the insider trading conundrum which may not completely eliminate unfairness, but is less damaging to the integrity, spirit and economic foundations of public stock market trading.",
  "key_points": [
    "Proposal suggests insider trading could be legalized to reduce damage.",
    "Author recalls colleague's minor insider trading incident.",
    "Legalizing insider trading creates unappealing world, author argues."
  ],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}