Reading through Is the Stock Market Rigged? I get to the part about Mississippi College School of Law professor John Anderson. To my mind, his opinions smack of an academic who has been immersed in their field a little too long.
Of course, his opinions may be more nuanced than the article suggests. According to the article's author, Liam Vaughn, Prof. Anderson believes insider trading should largely be legal, because they are making the markets function better. Better for whom? Would they still have to disclose their trades? Where would we draw a distinction between "legal" insider trading and price manipulation? Given the wealth and the quantity of stock controlled by executives, price manipulation would be easy to implement. Or should that be legal as well, to release government from the burden of regulating it? I could see this becoming quite the side hustle for a lot of executives, actively shoving prices around to get another 20-30% annual return on their income, and improve "market efficiency".
Within the scope of the article, insider trading sounds like a near-victimless crime, with the person taking the other side of the trade out a few dollars per share, at most. But that's a very narrow focus. The perception that executives willfully take advantage of insider knowledge undermines confidence in the market as a whole. This undermining could, as article does point out, be driving interest in cryptocurrency, and is definitely a driver in the meme stock trend.
Anderson is also quoted as saying “The whole reason people come to the market is because they think they have better information, better understanding than their counterparties.” Which seems like a phenomenally shallow view of the average retail investor, who may be buying stocks on impulse, through a mutual fund in their IRA, a "hot tip" on Reddit, or by scouring a website like Morningstar, but who is definitely not going to the market thinking they have better information than everyone they're trading against.
Personally I think the practice of paying executives in stock grants and options has a corrupting influence, and is detrimental to the long-term health of both the companies and the country. This focuses execs on increasing shareholder return at any cost. If we want executives to have skin in the game, let them get it like the majority of their employees -- have the stock go into a retirement fund and they can't draw on it without paying huge penalties prior to actual retirement. Nor should they be allowed to borrow against that fund without paying significant penalties or taxes. And in the meantime, they can earn a modest salary (at least modest by today's standards).
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