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A comment on The Folks Who Sell Your Corn Flakes are Acting Like Goldman Sachs. Parent comment

Re:The Folks Who Sell Your Corn Flakes are Acting Like Goldm... by lmkg on Friday September 13, 2013 @12:15PM (#6381389)
Allowing insider trading brings along with itself a whole slew of perverse incentives. The biggest by far is that most categories of 'insiders' are also in a position to materially impact the value of companies. Parties like tax auditors, advisory services around mergers & acquisitions, management consulting, that sort of thing. Insider trading is therefore partially a protection against conflict-of-interest.
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Re:The Folks Who Sell Your Corn Flakes are Acting Like Goldm... by anon1385 on Friday September 13, 2013 @01:12PM (#6381735)
What you are talking about broadly is Control Fraud[1]. One of the most startling things about mainstream (neoclassical) economic theories is that they implicitly make the assumption that control fraud doesn't exist[2]. Yet it has been the cause of many recent high profile crises [3][4][5]. So when you see people talking about how insider trading can't ever be bad, and how executive interests are always aligned with public good, keep in mind that those people are living in a fantasy world where Enron never happened.

[1] https://en.wikipedia.org/wiki/Control_fraud

[2] http://neweconomicperspectives.org/2013/07/discrediting-regu...

[3] https://en.wikipedia.org/wiki/Savings_and_Loan_Crisis

[4] https://en.wikipedia.org/wiki/Enron

[5] https://en.wikipedia.org/wiki/Worldcom

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