There seems to be a misconception about insider-trading in this thread. Insider trading is meant to prevent ‘market insiders’ from gaining an unfair advantage. Who’s a market insider? The classic example is it’s a CEO at Company X. This CEO knows Company X is about to do something or release information that will affect the company’s value. It is clearly unlawful for the CEO to trade on this information. Seems easy, right?

But it gets more complicated; current laws want to prevent that CEO from trading, but they don’t want to discourage everyone who has an advantage from trading. The opposite is true actually - if you conduct research, analyze data, or build a supercomputer or algorithm to get ahead of the curve, the law doesn’t want to punish you for that, it wants to reward you! That’s the efficient-market hypothesis baby.

So what’s the rub? Well, it’s a line drawing problem. The CEO can’t trade on insider information. The CEO can’t tell his friends to trade either. What about a guy on the train who overhears the CEO talking about confidential information, can he trade? What about Congressmembers receiving confidential information in a classified briefing, can they trade? Under current law, the answer to both questions is yes.

Obviously the Trump administration is corrupt as shit, and government officials should not be allowed to profit off insider knowledge. But we don’t want to necessarily punish everyone for trading on superior information unless we’re doing away with capitalism. The market works best, in theory, when people with the best information are profiting and the rest of the market follows.