I must be dumb, but I don't understand this statement... How is that a "theft"? You knowing that I eat 2 eggs in the morning when I don't want people to know is not you "stealing" information from me.
From an outsider perspective like me (I don't own stocks except through my 401k), Wall Street seems like a game of information asymmetry anyway where the only winners have an information edge at some moment in time. Now the question is about how "fairly" was the information obtained which seems pretty blurry to define to me.
Suppose you are giving a prize for someone who guesses how many eggs you eat in the morning. If I watch you checkout at the grocery store and based on the number of eggs you buy, guess that you eat 2 eggs a day, and win the prize, that is not theft.
If however your chef who prepares you breakfast every morning “guesses” you eat 2 eggs, then that would be problematic.
If the chef working in your restaurant sells a cake he made there and puts the money in his pocket instead of yours, that's theft. It's legal to sell cakes the chef made, it's just the the resulting value belongs to the employer and not to the chef personally.
If the chef working in your restaurant sells some of the cooking ingredients and puts the money in his pocket instead of yours, that's theft. It's legal to sell spare cooking ingredients from a kitchen, it's just that the resulting value belongs to the employer.
And in the exact same manner, if the chef working in your restaurant sells the customer order statistics (e.g. how many eggs were eaten) and puts the money in his pocket instead of yours, that's theft. It's legal to sell customer order stats, it's just that as far as those stats have value, that value belongs to the employer and not to the chef personally.
Correct, you don't necessarily have to "steal" that information to find it out.
If you hire me to cook to you breakfast with the understanding that your breakfast habits are confidential and I give that information away, then that is "stealing" information because I have a duty to keep that information private.
If I spy on you while you are eating and figure it out and give the information away, then I did not "steal" the information because I don't have a duty to keep that information secret.
When I take information entrusted to me by my company and use that information to profit in the market, I have taken information, used it in a manner not authorized, and profited.
That's different from someone else unaffiliated with the company independently deriving the information, using it in the market, and profiting.
As an example, the researchers who discovered VW's cheating on diesel emissions tests (assuming they were independent) would be perfectly within their rights to short or buy puts on Volkswagen. VW executives who were responding to the EPA inquiry or otherwise discovered the cheating would not be within their rights. In both cases, there was a moment where that information was material to the valuation of VW and not public, yet one group could legally trade on it and another could not.