Vagueness in the law renders the insider trading enforcement regime in the United States unjust and irrational. One way to improve the current regime from the standpoint of justice and efficiency would be to recognize an express safe harbor for issuer-licensed insider trading. It is anticipated that any such move toward liberalization would meet political and cultural resistance on the premise that all insider trading (even if it is licensed by the issuer and economically efficient) is morally wrong. The goal of this paper is to clear the path to liberalization by answering such objections to reform in the ethical terms in which they are expressed.
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