Your CEO scenario is an argument for corporate inside information to be disclosed more publicly and sooner than it is now so all shareholders have equal opportunity to make decisions. The idea that a CEO selling their shares gives everyone information doesn’t really hold water since there is a lag in the reporting and anyone seeing the report has no idea why the CEO sold a bunch (college tuition due?).
It is highly inefficient economically to depend on shareholders guessing about insider trading as a means of detecting crucial corporate info. When I was at the CFTC, we often worked with the SEC on these things. Reporting disclosures sometimes alerted our regulators to the need for an investigation. But even with govt investigative power it took a long time to determine why a transaction occurred. Not much use to investors because a sale, or buy, could even be planned far in advance under a contract, ot triggered by economic indicators.
You are correct: insider trading is perfectly legal provided it is done properly. We want corporations to be run by people who have a stake. But the rules against using inside information are designed to avoid letting the insiders be the first in line which leads to distrust of market pricing.
As to all public officials, I would prohibit all market activity except for blind investments in mutual funds. These trades were legal until 2014. One of these guys was one of the 2 senators who voted against the law then.
But in my mind, this may not even count as inside info. There were many sources telling us that this was going to spread, and anyone with an ounce of realism knew the markets would tank. The fact that they got a secret briefing sure didn’t seem to motivate any pushback against the Admin’s rosy posturing.
Nice discussion, by the way. Reminds me of dinner discussions on theoretical stuff that would go on for hours in Law School.
Afterthought: If trading on insider information is victimless, then how far would that extend? Let’s say the CEO, the board, all the officers, and all their relatives own half the shares, and by dumping in concert take virtually all the equity out within a couple of minutes and leave the stock in a company frozen by the NYSE–no victims among the remaining 50% of shareholders?