It seems perfectly natural and innocuous that those with the most information would want to profit from it, and doing so isn’t illegal anywhere else. So why is it prohibited to make trades based on information not everyone has? What undesirable thing does this prevent?
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Insider trading makes the stock market unfair. Those with insider knowledge will always be able to take advantage of those without insider knowledge.
Imagine if you could play poker against someone and the rules were that they could see your cards but you could not see their cards. You would know you could not win and would not play.
So if insider trading were legal, no outside investors would invest in the stock market because it would be rigged against them. So there would be no stock market.
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