I tend to agree with economists who favor legalizing insider trading and think the law is mistaken to classify insider trading as a subset of securities fraud.
For instance, take the charges against Kim Schmitz (known as Kim Dotcom now). Let’s say Schmitz did have every intention/possibility of investing 50 million euros in Letsbuyit.com. If he let some know in advance (“insiders”) and they got a jump on other buyers, where’s the harm in that? Like it or not, that’s what the stock market is; a place where those who have the most accurate information the soonest, tend to win. However, Schmitz reportedly had no means/intent to invest yet reportedly pulled in enormous personal gain using his relatively small original stake ($375,000) and others he gave false information to. If so, then that’s fraud; yet he was found guilty of “insider trading” despite not having any inside information to give.