When the news broke last Friday regarding the arrests of several individuals in a very high-profile insider trading scheme, you could almost hear the nervous musings of the investment community belittling the government’s action.  It seems as if every time someone gets caught trading on illegally-gotten investment information, the hair-splitting amoral posturing begins.

Yes, there is a thin line separating legitimate research and insider trading.

Yet, there is always at least one shameless industry shill who is willing to rationalize why insider trading laws are ostensibly unjust.  Here is a snippet of what Jim Woods of InvestorPlace had to say last Friday in defense of insider trading:

“In most cases, insiders are those who have either worked hard to achieve a particular standing in a company, or who have the capital resources to uncover specialized information about companies.”

Translation:  1) I am better and/or smarter than you, so I am entitled to take advantage of everyone else; 2) I have the industry contacts, and sufficient financial and/or information resources to give someone the incentive to take enormous advantage of an opportunity for us to soley profit from trading in certain stocks long before the information becomes public knowledge.

Yes, Jim Woods.  Your stance only further validates the perception of individual investors in the inherent unfairness of financial markets that they have rightly concluded are heavily gamed in favor of those who work within the industry.  Now just think . . .  if all of those investors exit the market because of this fundamental inequity, you will not have anyone to sell your stock to in order to secure your illegal profit.

Guess you never thought of it in that context, did you?