How is it regulated?
Inside trading happens regularly by investment firms. They have access to inside information. They use that information to their advantage before the knowledge becomes public. Inside trading is most damaging when information about mergers or takeovers lead to investments. The inside trader usually makes large amounts of money by buying up the stock of the company about to be taken over.
The Securities and Exchange Commission (SEC) is the governing board in place to detect and stop insider trading (among other things). However, the SEC does not have the authority to prosecute illegal activity. They simply report the activity to the federal government for consideration and possible adjudication.
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The SEC took a major public relations hit with the Bernie Madoff Ponzi scheme. Most Ponzi schemes die out rather quickly but Madoff was able to continue his for decades. Madoff was a respected member of the financial community. He was even an advisor to the SEC on how to regulate security exchange.
When the Madoff case exploded, the SEC got caught with their pants down. How could a respected member of the financial community run a Ponzi scheme for decades? How was he allowed to be a prominent advisor to the SEC?
Needless to say trust in the SEC to regulate security exchanges plummeted. Still living in the aftermath of that massive incompetence, the SEC continues to look for ways to rebuild its reputation with both the financial world and public sector.
Another issue with regulating insider trading is that is almost impossible to prove. There are various legitimate reasons an investor can invest in companies. Some investors even get lucky by randomly investing in a company about to be taken over, etc. Thus, unless the SEC can find a whistle blower, there is very little it can do about insider trading.
In short, insider trading is to the financial world what marijuana is to the NFL. There are people on both sides of the issue. Some claim it is a crime while others will argue for legalization. Some claim those who do it have done nothing wrong while others claim their actions are illegal and seek prosecution. Either way, it is going on and will continue to go on ad infinitum.
So, why focus on Kendricks when there are bigger fish to go after?