What's Wrong About Insider Trading?

"Professional investors make money because of asymmetries of information. Someone working on Wall Street is almost always going to be better versed on financial issues than a casual investor. People make careers picking up hints and suggestions to use in trading."

Yes, professionals should be better at it than amateurs. However, those professionals are still using public information. Just because they are better at it doesn't mean that it these asymmetries are unfair. Regardless of what the article says -- there is a victim in the form of the other shareholders. The impact of the crime may be dispersed over many people, but that doesn't mean it isn't still just plain wrong to do. All of the owners should have the opportunity to begin selling (or buying) at the same time if they choose to stay on top of the information and to argue otherwise feels foolish. Just because they cannot get insider "not trading" doesn't mean they shouldn't nab insider trading.

Didn't the author totally miss out on the most important consequence of a "level playing field"? That is, anyone can feel like they can safely invest. A level playing field opens the stock market to people in rural areas, rather than limiting it to well-connected upper-crust insiders. A lot more money can end up capitalizing innovators and entrepreneurs.

Interesting quote:

"People make money by not trading as well as trading. But it is virtually impossible to prove that someone chose not to buy or sell stock because of a legally improper tip. So hundreds, maybe thousands, of people get away with insider "not trading" every year."