Matt Levine’s Money Stuff: The FBI Found Some Insider Betting

Insider betting

Here’s how insider trading works. Insider trading is a variety of securities fraud. In the US, there is no specific statute prohibiting insider trading. Instead, there is a law that makes it illegal “to employ any device, scheme, or artifice to defraud” someone in connection with a securities trade, and courts have for decades agreed that insider trading is a kind of “scheme to defraud” people.

That sounds intuitive enough. If I have inside information about a merger, and you don’t, and I buy the target’s stock from you, then it does feel like I have ripped ...