[none_for_me_thx]

Insider trading is not fraud. If someone is merely trading based on insider knowledge (that is, they aren't also being fraudulent about it), there is no deception. A person ought to be able to dispose of their property when and how they see fit. Moreover, we should actually want insider trading to happen more often, since prices transmit knowledge, and more knowledge earlier is a good thing for markets.

This is why some people, myself included, believe insider trading is a victimless "crime" which should be decriminalized.

[benpbenp]

On the contrary, as Ambrose says (De Offic. iii, 10): "In all contracts the defects of the salable commodity must be stated; and unless the seller make them known, although the buyer has already acquired a right to them, the contract is voided on account of the fraudulent action."[0]

It is altogether sinful to have recourse to deceit in order to sell a thing for more than its just price, because this is to deceive one's neighbor so as to injure him.[1]

It seems to me, generally in the case of publicly traded securities, that you may assume that your counterparty in any trade has access to all the same information you do in making their decision to buy what you are selling or to sell what you are buying.

However, this assumption no longer holds if you knowingly make use of insider information in making a trade. In this case, it is more likely than not that the counterparty to your trade does not hold the same information that you do, and hence executing such a trade can rightly be called fraudulent.

An obvious exception would be that you can make the same trade, off-exchange, with someone you know personally and to whom you can privately relate the relevant insider information before making the trade. Is this the type of circumstance you meant when you said "merely trading based on insider knowledge... there is no deception"?

[0] http://www.newadvent.org/summa/3077.htm#article3

[1] http://www.newadvent.org/summa/3077.htm#article1

[lmm]

The point is that all investors should have equal access to information. Of course some investors are more able to fly a surveillance helicopter over a warehouse than others, but there's an equality in principle there: anyone with the money can hire their own helicopter.

If one investor has a friend inside the company and another doesn't, that's different. That's not a difference in resources, that's a difference in how the company itself is treating its investors. It's inequitable on the face; more pragmatically, it makes it much easier for the rich to exploit their advantages if they can just walk up to company officers and bribe them, which exacerbates inequality. Anything the company tells one investor, it is and should be obliged to tell all of them (and all at the same time).

[kasey_junk]

I don't have much of an opinion one way or another about insider trading laws. That said, I think the single biggest benefit to removing them would be destroying this fictional notion that all investors have equal access to ALL potential investor relevant information. This is simply untrue and anyone investing with the idea that it is true is deluding themselves.

Insider trading laws don't try to make everyone have equal access to information, they try to make everyone have equal access to a very constrained subset of information, because any legal scheme that tried to do more than that would be destined to fail.