Insider trading, like blackmail, is something everyone abhors and no one can say why. Economists have shown that under a variety of plausible circumstances insider trading is actually beneficial for all shareholders and investors, because, for instance, it can be used as a particularly efficient form of incentive compensation for corporate executives. For this reason many shareholders would be perfectly agreeable if their corporation would add a provision into its charter expressly authorizing its executives to engage in insider trading. Yet many people, even after they have grasped the economic case to be made for insider trading, continue to regard it as somehow immoral even if economically desirable. And the law certainly forbids companies to allow their executives to engage in insider trading, even if their shareholders should expressly authorize it. But no one to date has been able to explain why insider trading is immoral and why it continues to be immoral even if the shareholders unanimously authorize the management to engage in it.

— Leo Katz, Ill-Gotten Gains, 1996