Is it always worth regulating insider trading?
Professor Meziane Lasfer debates the regulation of insider trading at The Capital Club Dubai.
Insider trading is heavily regulated in many countries, yet it is better in some circumstances to deregulate it, argued Cass Professor Meziane Lasfer at a recent debate organised in association with the Capital Club in Dubai.
Professor Lasfer pointed out that insiders like Chief Executive Officers and Chief Financial Officers "benefit the financial markets and shareholders when they trade in their own firms' shares.
He added, "Since their trades result in an increase in market efficiency, as they usually buy after significant price decrease and sell after price drops, there should be relatively less restrictions in their trades."
His comments were drawn from his own extensive research into the topic in the context of a vigorous current debate in international legal circles on whether insider trading should be legalised by regulators.
Whilst remaining subjective on the topic Professor Lasfer suggested a new approach to insider trading, one where managers should be allowed to sell shares at any time but regulate the buying of shares in order to prevent false increases in share prices in the market.
Professor Lasfer said, "Managers should be truthful to themselves, inform financial analysts of the actual worth of their companies, and ask them in turn to inform the market."
This debate was the latest initiative to result from a Memorandum of Understanding signed by Cass and The Capital Club in February 2011.
General Manager at The Capital Club, Bill Loveday said, "To lead such intellectual topics of discussion, you require the most distinguished and learned professionals and it is for this reason we were honoured to have Professor Lasfer join us - something made easier through our recent partnership with Cass."
Ehsan Razavizadeh, Regional Director of Cass Business School, City University, London MENA region said, "Cass Business School Dubai and The Capital Club continue to work closely to create compelling events for the business community here in the UAE. As a world-renowned expert in the area of finance, Professor Lasfer's thoughts and insights made for a fascinating debate"
The Capital Club welcomes Cass's Charles Baden Fuller for another evening of debate on 26 September 2011.