[elbasti]

Insider trading isn't illegal because it's unfair to retail investors--it's illegal because it's unfair to _existing shareholders_ , which is a much more defensible position.

Imagine you're an executive with inside information that you think will make the stock go up. So you buy some stock (from an existing shareholder, obviously), and then the stock goes up. That shareholder rightly will feel stiffed.

Conversely if you sell stock and it goes down, the person you sold it to--now a shareholder to whom you have a fiduciary responsibility--is left holding the bag.

[jstanley]

But the person on the other side of the trade would have been on the other side of the trade regardless!

The fact that it's an insider rather than an outsider that they're trading with doesn't make any difference to whether they win or lose.