Why should "insider trading" be considered illegal?

Question

For example, the movie Wallstreet...

Answer 1

Because the essence of the stock market relies on equal access to information - otherwise it ceases to be a good place to invest, and so one key element of the financial structure of capitalism fails.

Answer 2

With "insider trading" you have information because of your position with the company or affiliates that no one else has. This places you at a distinct advantage and enables you to take advantage of the lack of knowledge of others.

If insider trading was allowed, the top management of the company would be the only ones to benefit from trading in the shares of the company. For all other persons the risks would be too big even to try and invest, and it will be safer to use your money for other purposes.

Answer 3

Insider trading or dealing is the purchase or sale of a company's securities effected by or on behalf of a person with knowledge of relevant but non-public material information regarding that company.

It is illegal because insider is in a position to make massive gains by selling or buying securities before information that might affect the price of the company's securities (price-sensitive information) is made public

Answer 4

I haven't seen that but it should be considered illegal because insider trading gives people an unfair advantage over others. It would make the stock market even uglier than it is now.

Answer 5

Well, insiders are given confidential information by the company. If they use this information for personal gain, they take advantage of the trust the company has put in them. Insider trading, therefore, constitutes a breach of duty enforceable in a court of law.

Answer 6

Simple, because it's not fair to the rest of the players who don't have the inside scoop. Financial markets are suppose to be fair, meaning free access to the same information and full disclosure of any conflicts.

Someone who already knows what's going on has a distinct advantage over the rest who don't know about it.

Answer 7

In many countries it isn't.

The main advantage to it being illegal, is that otherwise it is far too dangerous to buy stock in a company.

What happens is that the insiders can dump the stock whenver bad news is coming, before you can sell your shares. This means that stock is worth a lot less and this will impact the wealth of the entire economy.

Answer 8

Because people would have a hand up on making money. It is like throwing dice and knowing that you will get a 6 everytime. Or know the outcome of the throw. Buying stocks is a gamble, nobody should have the heads up on what a particular stock should do.

Answer 9

Because it provides for some an advantage that others may not have equal opportunity upon. The system runs the courts. The courts administer justice. Justice is blind, and weighs the evidence submitter. Accordingly, by our system of justice everyone has an equal opportunity to progress.

Answer 10

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