PurposePredatory trading is a stock market trading technique in which certain market participants exploit information about other market participants' need to trade. Predatory trading often harms others. Hence, this paper examines the determinants and effects of financial practitioners' and lay people's judgments of predatory trading. Specifically, it investigates how the public availability and reliability of the exploited information affect their ethics and legality judgments and how the latter influence their behavioral intentions and regulation support.Design/methodology/approachThe authors conducted two scenario judgment studies. In the first study, participants were financial practitioners, and in the second – lay people.FindingsPractitioners often judge predatory trading to be ethical. Practitioners and lay people incorporate in their ethics and legality judgments the public availability of the exploited information but tend to discount the legal reliability criterion. Lay people justify their ethics judgments using harm, legal or profit maximization principles. Practitioners' intentions to engage in predatory trading and lay people's intentions to let predatory fund managers invest their money depend on their judgments, which influence their regulation support.Originality/valueThis paper is the first to explore people's judgments of predatory trading. It highlights that despite the harm that predatory trading involves, practitioners often judge it to be ethical. Although law tends to lag behind financial innovation, people base their judgments and hence also behavioral intentions on their interpretation of the regulation. Hence, it reveals a dark aspect of the relationship between ethics and legality judgments.

Purpose Research has suggested that ethics judgments should be made from an impartial perspective. However, people are often partial about their money. This study aims to investigate the extent to which perspectives – the perspective of those who can gain from the use of a financial practice and the perspective of those who can incur losses due to it – affect lay people’s ethics and legality judgments of the practice. In addition, it asks which factors influence their investment intentions.Design/methodology/approach The study uses a between-participant scenario experiment, in which participants are presented with cases of predatory trading and front running. Each participant is asked to take either a gain or loss perspective through the formulation of the presented cases. Subsequently, all participants make ethics, legality and investment intention judgments.Findings The authors establish that perspectives significantly affect people’s ethics judgments and, to a lesser extent, their legality judgments. People’s investment intentions depend on their perspectives, too, as well as on their financial considerations, ethics judgments, legality judgments and trust.Originality/value Research has focused on relatively stable determinants of people’s ethics judgments of financial practices. This paper shows that the situational prospect of profit can sway lay people’s judgments. When people take the gain perspective, they judge financial practices to be more ethical than when they take the loss perspective. Furthermore, people’s perspectives can distort their legality judgments and influence their investment intentions.