It could be argued that with sound financial planning most employees should have a fairly secure financial status. Though this might not be the case for everyone, I get the feeling that the people who are trading on tips or corporate secrets aren't using the money to give to charity or to address the basic needs of their children. Certainly in the worst cases, or at least those that are most widely publicized, it is the richest one percent making themselves even richer. This was the case with Martha Stuart and Sam Waksal. Waksal was found guilty of insider trading and was sent to prison for 7 years. Jennifer Moore does an excellent job of presenting arguments that show the negative side of insider trading. The four points she brings up in the second part of her article are utilitarian reasons why insider trading cannot be practiced. The arguments are based on the self serving nature of human beings and I agree completely with her assessment of the situation. Combining these perhaps more contemporary views of the dangers with the traditional views that will be presented, show clearly that there is great danger to allowing insider trading to happen.
Rule Utilitarianism.
When applying Rule Utilitarianism, it is helpful to imagine a world where everyone followed the same conduct as the act in question. However, in the case of insider trading this is impossible as if insider trading were practiced by everyone the stock exchange could not work as it does today. Unless people had a secret tip they would not bother investing and if no one invested then there would be no market for shares. This lack of investor confidence would lead to a crash in the North American and likely the world market as a result. If everyone had the same information, the demand for stocks on the rise would be so great that the price would skyrocket so quickly as it was being bought up that by the time the last share was bought or sold, the price would be so outrageous it would not represent the true value of the assets of the company.