According to the man who headed up the government's deep probe into insider trading, Preet Bharara, the U.S. Attorney for the Southern District of New York, it is everywhere.
"Preet Bharara was cautious about what he would say to me, but one thing he did say was that insider trading is 'everywhere you look,'" George Packer, the author of the 11,000-word opus on the Galleon insider-trading trial running in this week's New Yorker, tells Felix Salmon.
To the extent that this is accurate, it raises the question: Why is the government expending so much time and money investigating and prosecuting insider-trading cases as crimes?
If insider trading is everywhere, this means the prosecutions have a bit of randomness to them. The targets of the prosecutions are not just people who are insider traders, they are people who are insider traders who have had the misfortune of coming to the attention of prosecutors. They are, in other words, the losers of a criminal prosecution lottery. Many, many people have tickets, but only a few have their numbers pulled.
That's not the way criminal justice should operate.
What's more, if insider trading really is everywhere, then the deterrent effect of prosecutions seems to be non-existent. The market place is not made more level by the prosecutions, and there's no reason arresting a few bad apples should raise investor confidence in the integrity of the market.
Which is to say, the benefits of the war on insider trading seem to be small.