The ethics of insider trading revisited

Following Manne (1966, Insider Trading and the Stock Market (New York, Free Press)) we introduce a distinction between insider trading and market manipulation on the one hand and corporate insiders versus misappropriators on the other hand. This gives rise to four types of alleged inside transactions. We argue that the literature on insider trading has often targeted inside transactions type II, III and IV but that these arguments do not necessarily hold for type I transactions. We look for consequentionalist as well as non-consequentionalist arguments against type I transactions and demonstrate that these are hard to find. Throughout the article we refer extensively to the economic literature on insider trading in order to overcome a relative divide between the economic, legal, and philosophical discussion on insider trading.