Although permitting access to key corporate information by all employees could generate an insider trading nightmare (Fishman & Hagerty 110).
Possible solutions to the conflict
One question that everyone is asking is; how can this conflict be resolved? A palpable, simple, and stout approach would be returning the choice of insider trading regulation to individual firms. It is difficult to make out an externality that would validate putting this decision into the hand of a regulator. The most reasonable story that can be imagined is that board directors might disregard what is excellent for stakeholders and do just what fits the insiders. If this story was not found to be reasonable then firms could just be allowed to decide how to weigh any costs from daunting investment through unfavourable selection alongside any gains of using prediction markets to advance corporate information and coordination efficiency. This resolution, however coercing, seems politically infeasible for now.
Another comparatively strong approach has been proposed over and over again over the years, this was a requirement for all insiders to preannounce sales stock in their companies. This was a recommendation put forward by a blue-ribbon commission that assembled to address financial indignities and ensuing decline in investor confidence in the year 2003. "The commissions call for insiders to preannounce their sales echoes proposals made over a decade ago in the legal press, law reviews, and the U.S. Congress that would require preannouncement of all trades" (Huddart et al. 1). A common version of this proposal would offer average people much more protection from undesirable selection in trades than contemporary insider trading laws. It would also tolerate individuals and organizations much more suppleness in selecting their information policies, suppleness that they could use to discover decision markets and other fresh decentralized information processes.
The basic proposal would be to categorize traders into ordinary traders and numerous levels of privileged well-informed traders, and only permit trading between levels when the more informed trader has made known his specific planned trade prior. In properly functioning markets, even an hour might be ample of notice. Such a rule would widely do away with undesirable selection between levels, undesirable selection would mostly remain among traders of the similar level. Those who were required to preannounce their trades would find it rather harder to use markets to evade their risks (Huddart et al. 1), but being given the label of a well-informed trader should be much less limiting than being labelled an insider in the existing insider trading rules. Well-informed traders could be allowed to become well informed to the level of their desire and to reveal information discerningly to others within their level thus there will be far less necessity for rules on disclosure (Gupta 227).
In this proposal, well-informed traders would have the choice of forming their own unique markets to trade with one another, or to flag offers in a common market outside their level, and even to caution...
However, it would be safer to follow general policies that are being followed even now. This means that one should pass on published information to shareholders on the Internet as it would be simpler and less expensive to send. This may include information about quarterly results, monthly turnover, changes of directors, appointment of new sales agents, general trends of markets at certain times, etc. The question would still remain
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