[ari-freedom]

"Now suppose that there were no insider trading laws. If you were less than ethical, you could buy up a ton of your company shares, then report the product as ready for market."

But what I have italicized in your quote would be the real problem and that would be clearly wrong because you'd be profiting from something that isn't true.

The question I am asking is this: you know the product is ready for market but nobody else does. You buy all these shares and make a lot of money. That would be insider trading but I'm still not quite sure why that is 'wrong.'
It could indeed be bad for the system and we would want to make sure it doesn't happen but that wouldn't justify lengthy prison terms and moral condemnation.

[Leaning Right]

I think what you’re asking is this: suppose that the product in my privious post really is ready for market. Then what’s the harm in insider trading in that case?

No real lasting harm, in that case. But the problem is that “ready for market” is usually subjective. And if there were insider money to be made, an insider’s judgement could become very clouded.

The damage that could be done to society is just too great. When folks no longer trust the market, new companies will not be able to offer stock. And shareholders in older companies will see a decline in their net worth, for no good reason.

Civil penalties alone will not stop insider trading. The temptation is too great. Criminal sanctions are necessary.

And as a semi-libertarian, I say that reluctantly.