Why is insider trading bad. doesnt it actually help the alleged victim. for example mr. buyer wants to buy shares of msft. bill gates knows that msft is going to have a horrible earnings anouncement, so he sells his shares, which will add to the supply and bring down the price. Mr. Buyer then buys shares of msft at the lower price. without the insider trading, mr. buyer would have been buying into a market with less supply. anyone understand? same works for positive news. sellers sell into more demand.
ceo of a biotech company knows his drug is a bust and sells all his $50 shares to the unsuspecting public. the news comes out and the stock opens at $1. is that fair?
Biotech example: I'd rather have bought the shares with the extra supply in the market. Without the dumb, the purchase price would have been higher, resulting in a greater loss.
the company is bankrupt and will never recover. thousands of people lost everything and the ceo got rich. is that fair?
hmmm thought I made a funny here ... not sure if my response was erased etc (or maybe I'm halucinating) ... dont want the mods getting mad at funny stuff
but the biotech getting rich does not negatively impact anyone else; in fact, it benefits all of the buyers by allowing them to purchase at a lower price.
well, take the reverse then. a ceo buys ahead of good news. here, the sellers sell into more demand and amke more money. everyone wins.