Reopening Insider Information Debate.

[bills217]

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the terrorist example is vague enough where it might not be insider trading, but it is definitely unethical. whether it fits strictly under insider trading or not, i guess you might have a legal bone to pick, but there is no question that acting on this information is wrong.

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If we're not talking about legality, then why is acting on the information unethical? Who is harmed?

Frankly, I don't see any moral reason why insider trading should be illegal. It is simply in the best interest of everyone in the financial industry for the markets to be as transparent as possible (or at least create an image of transparency) to ensure investor confidence. But as far as morality goes, I can't think of any reason that insider trading is immoral. It's not fraudulent or aggressive in any way.

Maybe you can make an argument that insider trading is unethical (if not immoral) for someone who works in the financial industry, since they directly benefit from the image of transparency that the markets have created and their action might potentially harm that image. But I see no reason why Average Joe on the street in David's terrorist example is doing anything wrong by trying to profit from his knowledge, any more than I am doing something wrong when I bet against Kentucky's football team because a friend who's a manager tells me our best wide receiver has looked gimpy in practice.