Why is insider trading illegal

Kingdragon

Insider trading is illegal in the UK, but why is it as there are other unethical legal practices to make money?

Reply 1

DataVenia

Volunteer Team, Clearing and Applications Advisor

Original post by Kingdragon

Insider trading is illegal in the UK, but why is it as there are other unethical legal practices to make money?

Insider trading is illegal in an attempt to ensure that all participants in the financial markets have equal access to information, and therefore an equal opportunity to make decisions based on that information. If insider trading were allowed, then those with no ready access to such information would exit the financial markets as they would be at a disadvantage. Capital leaving the markets is not good.

Your argument seems to be that because some unethical practices are legal, all unethical should be legal. Have I got that right? Why not say, instead, that all unethical practices should be illegal? Did you have any particular unethical legal practices in mind?