According to the article, he knew he was not allowed to sell his stake. Maybe he was upset and was not thinking straight, but if the events happened as depicted in the article, there is no other way to describe this than "wrong".
Life is full of insider advantages. People profit from personal connections and information all over the place. Why should we pretend the stock market is any different? Especially considering how flimsy the charade really is. "Insider trading" is truly rampant and enforcement is an arbitrary joke.
I believe that the fairer and more transparent systems are the most efficient. The 'no rules' system you describe would quickly degenerate into a scamfest with far less participants and far less liquidity. Better to actually enforce the rules that exist to reduce the 'rampancy' of insider trading in my opinion.
Oh and I don't think I'll be investing in your startup.