In some industries it's not. In those that it is the marketplace/exchange is supposed to be a place where the same information is known by all so all parties will have an equiable chance of gaining/losing their money.
If you trade on information others do not know, you have an inequalable trading situation. Also if you knowingly dump a stock on someone before it goes tumbling down. You cheat those whomever you the dump stock on, and have essentially stolen from them via deception.
If you are buying apple right before the iPod and expect this stock to explode you have less of a victim as the person you bought from was a willing seller for the price.
That said if you are a farmer who grows soy beans you can still trade soy bean futures. You have insider information if it was a good or bad year for soy beans that another investor might not know, having not lived with the beans this crop season. This information does not preclude you from trading in the futures market.
Why is stealing illegal? If you have confidential information that will surely lead a stocks value to collapse once known, it would be like stealing to dupe someone else into 'buying' the stock from you before they knew the information.
Insider trading = theft and deception
Its only illegal when the general public is involved. Selling your business to another business, or heck, even selling your car to another person would be considered insider trading.
It means that some people in the market have information that simply isn't available to the general public, giving them an inequitable advantage.
this is worse: [ Wikipedia.org Link ]
Don't worry, Trump will probably make it legal pretty soon. It goes along with his whole idea of "Make White Collar Crime Great Again."
People can unfairly profit on news that the rest of the investors do not know about. For instance if you know that a major company is about to announce a net loss for the quarter and investors were expecting a profit, you know that stock is going to take a big dive tomorrow.
Good question! I'm sure lots of people do it every single day and get away with it because it's so easy to get away with it!
Don't ask me. I don't know.