How fair is it to be a part of a company whose benefit of internal information is used by the decision makers for their own personal benefit. Then what is the point in having shareholders at all. The hope of an average investor is tested on the skill of the top management that take decisions. These decisions must favour and must look after the interests of all investors and not for a personal gain of the management. Hence, Insider trading is an unethical practice and definitely be checked upon.
The motive behind insider trading is personal gain for the insider at the cost of the company and its shareholders. It has been affecting the securities market adversely for a very long time thereby making the investors feel unsafe and insecure. It is unjust on moral grounds and is sort of fraud by the insiders.
Insider trading is unethical and for this reason it is illegal. Manipulating the stock market is bad for the economy and it is clearly unethical. People should not unfairly profit from insider information. Several people have gone to jail for insider trading because of it harms people who work hard for their money.
Investors are mislead into investing in a failing business. The business or corporation tells the investors that they are doing great and sales are up when actually they are down. They convince investors to invest into them. The business is lying to them. Investors should know for sure what they are investing in and if what the business is saying is actually factual. It is absolutely unethical and unfair. In the case of Enron, the heads of the corporation knew they were going down so they told all their employees and investors to invest everything they have including their 401Ks into the business. They did this as a way to get money for themselves when the business goes bankrupt. Because they lied to investors thousands of people were left with nothing to retire on or live on and the heads of Enron came out with hundreds of millions of dollars. Insider trading is unfair and unethical.
The biggest things that we as a people strive for is a level playing field for everyone. We want all things to be fair for each person. Insider trading is something that is the very definition of an uneven playing field. It allows a select few to benefit greatly while others don't.
Insider trading allows individuals to take advantage of information that is not generally known in order to earn more than everyone else. This tactic is not fair to the average investor who doesn't have insider information and uses only publicly available information to make decisions about how to select investments that may be profitable.
I believe we must assume an action to be ethical unless and until it is proven to be otherwise. In the case of insider trading, the primary argument in support of being unethical seems to be a lack of fairness. However, this is just a rhetorical flourish trying to appeal to our emotions. What is unfair about it? The person on the other side of the transaction has already decided to purchase/sell the equity without any interference from the insider. That person has also already determined his/her level of utility in the transaction by determining what price he/she is willing to accept for the transaction. There is no unfairness in that. Additionally, there will always be some level of asymmetry in the information each party has in the transaction (and at the very least how each person analyzes the same information). Let's use a quick example. Say a fellow employee receives a set of baseball cards for his birthday. You notice that one of them is a rare Babe Ruth worth $5K (you are a collector). He offers to sell you the cards (knowing you are a collector) for $50. Is it unethical to accept that deal? He has offered a price for the transaction that he believes maximizes his utility.
We must be cognizant of the desire to regulate "fairness". Is it fair that a day trader focuses on a stock, learns everything she can about the stock (from public sources), and profits from that knowledge when a casual investor (who doesn't have the time to conduct the same level of research) doesn't have the same amount of information?
I just do not see how manipulating anything in business is wrong. Exploiting advantages, that's what drives growth. I don't understand how taking advantage of insider knowledge is any different than business as usual. A market is a market. I have never expected it to have a conscience or a heart. It's business.
Insider trading is not unethical because it is merely an investment option. If you want to earn more, you need to invest more. Some will claim it is unethical because it gives an unfair advantage to those who use it, but how can making an investment option be unfair? If someone is willing to pay for the information, then they should have the right to use it to increase their profits. It is an option that many know about, but some people make the choice not to use it. It is a matter of preference, but could hardly be considered unethical to decide to use it.
I have never used insider trading, but I heard that the person investing receives more money for his return by insider trading. I believe people have the right to invest their money any way they feel fit! What might be immoral to some may be just normal to another person. I do not believe that insider trading is immoral!