‘Trading the gap’ gives insiders a big advantage

Yet public companies are still allowed to wait four business days before announcing a major merger, bankruptcy, layoff or a new CEO.

[...] the findings raise questions about whether this was the intended effect of financial regulations, write study authors Alma Cohen of Harvard Law School and Robert Jackson Jr. and Joshua Mitts at Columbia Law School.

The Securities and Exchange Commission expressly allows companies to take up to four days to announce what are called “material events.”

[...] lobbying by the financial industry caused regulators to pull back.

Lawmakers need to be mindful of insider trading when designing disclosure rules.