The Ethics of Insider Trading

In business ethics, insider trading has gone untouched by scholars, as the consensus is that insider trading is morally indefensible, however, questions have emerged regarding the moral responsibility of insiders. This paper engages with Analyzing Insider Trading from the Perspectives of Utilitarian Ethics and Rights Theory by Robert McGee to evaluate the relationship between applied ethics and insider trading. A satisfactory anti-insider trading account must be able to economically or philosophically explain why insider trading is morally wrong. The assumption that this is impossible may be due to a misunderstanding of how we decide what morality is or how economic morality is defined. However, even when these differences are reconciled, anti-insider trading individuals must be able to confront what it is exactly that makes insider trading unethical. In this paper, I will provide an account of what makes insider trading morally impermissible by summarizing McGee’s claims, then countering these claims.