Doug Casey: The term insider trading is nebulous and as open to arbitrary interpretation as the Internal Revenue Code. A brief definition is to "to trade on material, non-public information." That sounds simple enough, but in its broadest sense, it means you are a potential criminal for attempting to profit from researching a company beyond its public statements.

Is the use of insider information ethical? The government says, "No!" I say, "Absolutely, whenever the data is honestly gained, and no confidence is betrayed by disclosing or using it." The whole concept of inside information is a floating abstraction, a witch hunter's dream, and a bonanza for government lawyers looking to take scalps.

When the SEC prosecutes someone, it can cost millions of dollars in legal fees to defend against them. And as with most regulatory law, concepts of ethics, justice, and property rights never even enter the equation. Instead, it's a question of arbitrary legalities.

Whether someone is prosecuted of insider trading is largely a question of who he is. A maverick researcher and a powerful government official will tend to get very different treatments. It's also a question of the psychology and motives of the prosecutor. Insider trading is generally a non-crime that can be used in a Kafkaesque manner by upward-mobile prosecutors.

Insider trading should, at best, be the basis of a tort suit by a company if a board member betrays a trust. It shouldn't be a crime prosecuted by the State.

Any ethical problem shouldn't be about how information is used or who profits but whether it's acquired honestly. Whether information is "inside" has no moral significance as long as it is honestly acquired. The market is a register of information, and impeding the free flow of knowledge in any way makes it less efficient. A morass of regulation only opens the door to real corruption. This is nothing new. Tacitus correctly said "The more numerous the laws, the more corrupt the State."

In addition, the very concept of insider trading is ridiculous from a practical point of view. Someone always gets the information first. If an announcement is made, the people in the room who hear it first act on it first. By the time it's published, it's old news. It's physically impossible for everyone to get information at the same time.