Information wants to be free and will always become free one way or another. The entire way the current system of insider trading illegality is set up favors only the super-rich and super politically connected that are beyond the reach of the SEC. For example - lets say you are the CEO of Pfizer. Now PFE is working on a blockbuster drug for obesity. Now since half of America is morbidly obese, you expect profits from this drug to exceed 300 billion over 20 years. You look at test results and they are fantastic - BMI goes down to normal in patients with no side effects. Now if insider trading was legal - then the scientists and basically everyone inside the company that is aware of the results can trade on the information and get rich. So can their family and friends that are in the know. But they have to act fast because the rumor will spread like california wildfire and pretty soon the stock is going to runaway. Now this is a very democratic way of making money. But no - the SEC says that no one can act on this information. So you can't buy PFE stock/options because that sends an immediate warning signal at the SEC once the information becomes pulbic. So you also can't tell your grandmother to buy PFE because she never bought stock in her life so its obvious she will show up on the SEC investigation list once the results of the drug become public. But this is just way too valuable information to not profit from so you call you're buddy Steve Cohen at SAC - who makes a living trading off insider info. He is beyond the reach of the SEC cause he's legal team's resources are enoumous compared to the SEC. Plus he's got some sway with the current admin. and both parties due to political donoations. Plus every other hedge fund manager that also trades on inside info. also got his back legally because they don't want to see a bad legal precedent set that could be used against them in the future. As a show of gratitude for you, he hires your college dropout son as a trader at his firm with a 7 figure salary plus bonus. So under this senerio instead of thousands of PFE employees and their freinds and family making money the only mofo that makes money is a f-cking billionaire - and maybe some of his other billionaire buddies that are also outside the reach of the SEC. How bout when Bernancke got a call from Bob Rubin and made the 'greatest monetary flip flop in monetray history' according to Larry Kudlow himself. You think Rubin didn't talk about his conversation considering he is chairman of the largest bank in the world. Or how bout Paulson winking at his buddies at Goldman - which turns out to have the largest earnings in history despite the biggest market rout in 5 years. Occasionlly the SEC may go after someone really high profile only to give the illusion of doing their due diligence. The current system trading of insider trading is only illegal for those without enourmous financial resources to fight the SEC and for those without political connections. Insider trading is the only real edge in the market and is worth trillions every year. And the SEC does a good job making sure this wealth never passes onto those that aren't already billionaires.