Like I said before, I don't think this is necessarily true. If you aim to enforce equitable, moral, rules of buisness relating to honesty, then there is no reductionist problem if you aim to avoid socialism and enhance a free market.

One can argue that insider trading laws are merely a prohibition on fraud, at least as applied to the person with direct insider knowledge. As they know something not known to the public at large, and which would likely alter the market had it been known, it is something akin to fraud or an unconscionable sale commited upon the other parties to teh transaction. Of course this presumes you have some duty to disclose the information, or a duty not to act on it.

I suppose you could argue that with the actual inside person who works for the company, that the duty flows out of the company's duty to not commit fraud. If the person acts on information not disclosed by the company, and in fact contradicting known information released by the company, then that person has committed fraud as much as the person who sells a new car without disclosing defects he knows to exist. Even though the company that made the car had an obligation to disclose the information relating to the defect, that doesn't relieve the person selling it for themselves of disclosing negative information.

Of course the above only covers the situation where an insider sells stock. I would imagine that a similar situation may be applicable when an insider buys stock. If they know the price they offer is far below the fair value, they may have injured another even at common law and equity by buying something based upon an innacurate or incomplete representation by the company. I think this is a more difficult case though. Do you have a duty to tell the person who's watch you buy that the jewels on it are, in fact, real? Since the seller makes the decision to sell at whatever price they like without a direct proffer from the buyer in the public markets, based on my understanding of them, then I would think the buyer simply accepts the offer, and thereby has no duty to correct the seller. I guess I'd have to think about it.

More tenuous is the individual not affiliated w/ the company who acts on insider information contrary to law. I think its difficult to reconcile this situation and the governing law w/ the free market philosophy.