Insider-trading prosecution trials have been confusing the investing public more than they should. Convictions have unfortunately clouded rather than clarified the picture. The media have been of relatively little help in remedying this public confusion.
The problem is actually twofold: One has to do with legality. The other has to do with what investors seek as a “level playing field.” They have nothing to do with each other. The former is about a forbidden activity. The other may be about a perfectly legal pursuit, but the public opposes it for a good pocketbook reason.
In the first instance, what is illegal is the sale or divulging of information that an employee or principal is contractually not permitted to divulge. It may be part of their employment contract or obligation to their company.
As an investor, you may not be hurt by such illegality, despite what the government prosecutors are able to get judges and juries to believe. However, judges and juries, unfortunately, are not always conversant with the way the investment industry truly works. Innocents as well as the guilty may therefore get caught up in such prosecurial zeal in the future.( See the Earl J Weinreb NewsHole® comments.)
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