kanuuker Posted January 4, 2014 Share Posted January 4, 2014 In an anarchistic society, how would insider trading and other cheating in the stock market be prevented and prosecuted? Link to comment Share on other sites More sharing options...
Wuzzums Posted January 4, 2014 Share Posted January 4, 2014 How are those dealt with now? Link to comment Share on other sites More sharing options...
kanuuker Posted January 4, 2014 Author Share Posted January 4, 2014 They generally aren't. I just want to know how to deal with it in a stateless society. Link to comment Share on other sites More sharing options...
Wuzzums Posted January 4, 2014 Share Posted January 4, 2014 How would you deal with them? Link to comment Share on other sites More sharing options...
kanuuker Posted January 4, 2014 Author Share Posted January 4, 2014 First off, I know squat about the stock market, so take that into account, but here's my thought. I'm going to assume that insider trading is actually unethical and a violation of contract between the traders and their clients. So based on that, if I suspected that there was insider trading going on, I would contact my DRO and have them investigate, and if they found guilt, they would then proceed with a legal case against them. I guess my question may more accurately be "who determines the rules of the stock market without a government regulatory body?" Link to comment Share on other sites More sharing options...
Wuzzums Posted January 4, 2014 Share Posted January 4, 2014 I don't know anything about the stock market either, but if your solution proves to be the most effective then I'll only go into trades that holds said solution as a standard. So you knew the answer all along. I guess my question may more accurately be "who determines the rules of the stock market without a government regulatory body?" But the body that would establish the rules doesn't have to be a government body. Because the government is the body that regulates the stock market now it doesn't mean it cannot be regulated without the government. For example, in communist dictatorships the government was the one that distributed bread/milk/etc, that doesn't mean those goods cannot be distributed without government meddling. Link to comment Share on other sites More sharing options...
kanuuker Posted January 4, 2014 Author Share Posted January 4, 2014 Oh, I'm fully aware that the government is not the solution; they've more than proved that they are not only inept, but utterly corrupt. But sans government, who determines the rules? Do rules even need to be determined by an 'agency' of any sort? Would the phenomenon of natural order suffice? Link to comment Share on other sites More sharing options...
Wuzzums Posted January 4, 2014 Share Posted January 4, 2014 But rules will exist. Rules are everywhere. Point of anarchism is that each person decides what rules to follow as opposed to a few people deciding what rules the rest of the population must follow. If I enter a store and the rule is an apple costs 100$, then I'll choose another store that sells cheaper apples. If I can't find one then I won't buy apples, and if nobody buys apples then the store owners will lose the investment they made in those apples and they will be forced to lower the prices or suffer a full loss. The government does just the opposite, it makes the store owner price the apples costly and it makes us buy apples, whether we want to or not. Link to comment Share on other sites More sharing options...
ribuck Posted January 4, 2014 Share Posted January 4, 2014 "who determines the rules of the stock market without a government regulatory body?" In a free society, there will be many competing stock markets, each with its own policies and its own (non-violent) sanctions. If one stock market is relaxed about insider trading, then those who don't like insider trading will use a different stock exchange (and may pay a different price). Rules against insider trading actually work against the outsider's best interests. If there is no insider trading, and there is non-public knowledge about a company, its stocks will be traded at prices that do not reflect the true value of the company. This does a dis-service to those who don't have insider knowledge. The sooner the prices are allowed to correct, the better. For this reason, insider trading should be permitted and even encouraged. In that way, the price of each stock will move most quickly to its true value. Remember that insider trading only benefits the insider while a stock is mis-priced. Link to comment Share on other sites More sharing options...
LanceD Posted January 5, 2014 Share Posted January 5, 2014 Why does insider trading need to be stopped? If your buddy's company is about to do something really awesome and become more valuable why is it illegal for him to tell you to get you to invest? Investing based on information available to you seems like a smart thing to do, not an illegal act. So before I tell you how to enforce the rules, I expect you to first tell me why your rules should exist. Link to comment Share on other sites More sharing options...
ribuck Posted January 5, 2014 Share Posted January 5, 2014 Suppose there was the most draconian anti-insider legislation, and that it was perfectly enforced. Even then, it could not stop those with insider information from profiting. Insider trading laws can prohibit insiders from trading, but they cannot prohibit insiders from not trading. If an insider knows that a stock is undervalued, the insider doesn't sell when they might have otherwise sold. And when the insider knows that a stock is overvalued, the insider doesn't buy when they might have otherwise bought. This way the insider can profit from their inside knowledge without breaking the letter of the law. Link to comment Share on other sites More sharing options...
ChrisL Posted January 5, 2014 Share Posted January 5, 2014 Why does insider trading need to be stopped? If your buddy's company is about to do something really awesome and become more valuable why is it illegal for him to tell you to get you to invest? Investing based on information available to you seems like a smart thing to do, not an illegal act. So before I tell you how to enforce the rules, I expect you to first tell me why your rules should exist. I agree with this, it seems to me that if you can't trade based upon information you know about the company, whether or not you are an "insider" the only other option is speculation. Speculation obfuscates value. Link to comment Share on other sites More sharing options...
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