Just a few things I'm thinking about after the first few reads of your paper. I don't know much about securities law but did do some reading about it...anyway, first, you say that securities law is attempting to achieve the unachievable in prohibiting insider trading. On a general note, the government tries to work towards many ideals we don't think are perfectly achievable in practice (I'm thinking about equal opportunities in society for people of all races, or equal access to public school education, for example). Second, what are exactly you trying to argue here? That insider trading should no longer be prohibited? Or that the Supreme Court's opinions have simply been contradictory? (That said, I think you can make the case that insider trading should be abolished if you want to.)

Also, I think there are a few more legitimate motivations for banning insider trading and I think you should refute them more forcefully (rather than saying they're wrong because the Supreme Court hasn't always referenced each or listed them in an opinion).

The whole reason these laws were made, as I understand, was that in the 1930s people thought that the entire system was unfair. The 1933 act was an attempt to restore integrity to the stock market - which after the 1929 crash came to be viewed as a place that was routinely exploited by people with an edge. The whole country suffers as a result if it becomes harder to sell pieces of your business to the general public if they think the game is rigged. Arguably it's good for the whole country if someone can quickly raise capital if they have a good idea and want to spread it. People are more willing to invest in your business if they think there's going to be a liquid market for selling the shares they buy.

I understand that once people invest money in the market, they are as you say, "on their own." However, our society allows - and enables - people to specialize in all sorts of things. While your average trader hypothetically shouldn't have nonpublic information about a company, he may have some fancy computer technique to analyze markets that you or I may not. By the same token, and I hope this isn't too much of a stretch, we are now gaining the tools to analyze legal problems by virtue of our enrolling at Columbia Law School. I guess you could say this is unfair to the rest of people with legal problems in another manner.

-- JessicaCohen