I’ve never been sure why that’s illegal.
There are two sides to every transacation. If I buy shares of stock, it means you or someone like you is selling yours. If I bought a peice of land from you at the going rate but then a month later some company announced it was buying up land at 10x the going rate because of oil exploration or something, you might wonder if the buyer knew this and cheated you. Same thing.
Example:
I know a company is going under, hence I sell all of my stock to pension fund or trader without disclosure, knowing that they'll be getting totally screwed in a matter of days.
I'm sure others can think of far worse consequences than my simpleton example, but there are reasons why it should be illegal.
“But when clinical trials showed the drug didn’t work, Collins — at the time firm’s largest shareholder and a board member — called his son, Cameron, and told him to sell off the stock before the news was made public, prosecutors alleged in the indictment.”
And how does the Obama Justice Department know this?