ABSTRACT
CONTENTS 13.1 INTRODUCTION 210 13.2 MACEY: THE DEW IS THE WHISTLE 210 13.3 THE DARK SIDE OF INSIDER TRADING 212 13.4 RULE 10B5-1 PLANS (R10P)—THE ESSENTIAL DETAILS 214
13.1 INTRODUCTION e securities-trading markets are driven by many forces. In the 1970s we believed that a simple regression could tell us all we needed to know about “e Market.” Today, we better understand just how little we really know about this serpentine time series called “e Market.” is is relevant in trying to understand insider trading (ITr) simply because the one thing that we know for sure, and really have always known, is that one can prot from information asymmetries. If my distant early warning (DEW) system is better than yours, in every scenario I win. In this way one actuates the trader’s golden rule: “Do unto others, before they do unto you.” is is not cynicism, but rather “e Street.” is primordial dictum is the reason that there needs to be regulation of the trading markets and, more importantly, of those who trade. e question, and the point of departure for our inquiry, is what sort of ITr regulation there should be and how it might be best eected. We are interested in the positive and negative aspects of ITr-as an activity that sometimes needs to be controlled, but that under some circumstances functions as a DEW of possible problems and so should be permitted. To this end we will (a) examine an intriguing model of control oered by Macey (2007) that conditions the legality ITr on the whistleblower’s rationale, (b) enlarge our inquiry to incorporate the stream of legislation that aims to control the dark side of ITr, and (c) make recommendations for dealing with this elusive and contentious issue of ITr.
