The development of securities law has been influenced by perceptions that market efficiency is an important regulatory objective. Thus, market efficiency goals have played a role in recent debates on the scope of insider trading liability, on trading in stock index futures, and on mandatory disclosure of merger negotiations. However, an examination of the economic consequences of stock prices suggests that the main function of stock prices is not resource allocation but rather the redistribution of wealth among investors. Thus, more efficient public stock markets may contribute little to allocative efficiency. Before investing scarce resources and sacrificing other goals like investor protection or fair and honest markets to the goal of market efficiency, we should require stronger evidence that improving efficiency brings commensurate benefits. 464 footnotes.