Why is insider trading illegal?

<p id="isPasted">Insider transactions are illegal when individuals with access to material, nonpublic information use that privileged knowledge to trade securities. The elements of insider trading often include the following:</p><p>Trading by insiders: For example, if a CEO sells shares after learning of an impending financial loss before that information is made public, this constitutes illegal insider trading.</p><ul><li>"Tipping": This involves an insider sharing confidential information with another person (the "tippee"), who then trades on that information. Both the tipper and the tippee are liable for insider trading violations.9</li><li>Misappropriation: This is the word used when individuals who are not traditional insiders, such as lawyers or consultants, obtain confidential information through their work and use it for trading purposes.</li><li>Front-running: This occurs when a broker or analyst uses advance knowledge of a pending order to trade for their own account before filling client orders.</li></ul>