A Benthamite Critique of Manne’s Entrepreneurial ‎Defence of Insider Trading: Utility Vs. Reward

  • Authors

    • Prof (Dr.) Pradip Kumar Das Professor, Department of Law and Governance, Central University of South Bihar
    • Prabhat Deep Research Scholar, Department of Law and Governance, Central University of South Bihar
    • Shivam Raghuvanshi Research Scholar, Department of Law and Governance, Central University of South Bihar
    • Sohom Saha Research Scholar, Department of Law and Governance, Central University of South Bihar
    https://doi.org/10.14419/14pn8b24

    Received date: October 6, 2025

    Accepted date: November 17, 2025

    Published date: November 28, 2025

  • Insider Trading; Manne Entrepreneurial Reward; Insider Trading Defence; Bentham Utility; ‎Securities Regulations

  • Abstract

    Henry G. Manne's book, ‘Insider Trading and the Stock Market,’ was the first attempt in the ‎literature to explore the subject thoroughly and present a logical conception as a basis for ‎the development of legal rules on insider Trading. Manne’s theory postulates insider trading as a ‎legitimate reward for entrepreneurs who are ‘organizers of uncertainties’; they combine the ‎thought of productive factors to promote market efficiency. However, this view overlooks the ‎disproportionate harm inflicted on uninformed market participants and the erosion of public ‎trust in financial systems. Bentham’s utilitarianism advocates maximum happiness for the maximum ‎number, and provides a compelling foundation for regulatory intervention through positive law. By ‎emphasizing collective welfare over individual gain, Bentham’s framework supports legal ‎mechanisms that deter insider trading and promote transparency. This qualitative work analyses ‎the tension between individual entrepreneurial benefit and societal harm, arguing that insider ‎trading regulation is ethically justified when viewed through a utilitarian lens. The analysis ‎reveals that while insider gains may be minimal, the aggregate losses to outsiders through ‎distorted prices and reduced confidence are substantial. Bentham’s utility calculus favours ‎regulation as a means to safeguard market integrity and ensure equitable participation. This ‎study contributes to the ongoing discourse on financial ethics and the philosophical ‎underpinnings of securities regulation‎.

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  • How to Cite

    Das , P. (Dr.) P. K. ., Deep, P., Raghuvanshi , S. ., & Saha, S. . (2025). A Benthamite Critique of Manne’s Entrepreneurial ‎Defence of Insider Trading: Utility Vs. Reward. International Journal of Accounting and Economics Studies, 12(7), 728-733. https://doi.org/10.14419/14pn8b24