Insider trading laws are there to protect the health of the market itself. If people believe that there is widespread insider trading going on, the stock marke

Insider trading laws are there to protect the health of the market itself. If people believe that there is widespread insider trading going on, the stock market becomes a market for lemons. As someone without insider information, your assumption should be that whoever you are trading against has more information than you, which means you got the raw end of the deal. If your assumption is that you get a bad deal whenever you trade, you are never going to trade, and then the market collapses. This was a contributing factor to the crash of '29, and sure enough, the SEC was created in 1933. Its first chairman, Joe Kennedy (father of JFK), was one of the most notorious insider traders in history, and his mission was to prevent anyone else from getting away with what he did.