Insider Trading in Jewish Ethics
Insider trading--using privileged knowledge for profit in the stock market--violates many Jewish principles.
4. There are cases where insider information is bought from somebody else who had access to data as part of his employment. For example, a lawyer working for a firm of brokers, a bank official involved in the financing of a takeover through the issuing of bonds, or a government official privy to decisions regarding future zoning regulations, instead of using the information himself, sells it to somebody else. This sale introduces a new element into the use of insider trading, namely the receiving of stolen goods.
The halakhic codes forbid the buying of stolen goods, seeing the buyer, in the words of Maimonides, “strengthening the hand of evildoers since if he wouldn’t be able to sell the goods, the thief would not steal.” In other words, the buyer is creating a market, thus making the theft profitable and so shares in the immoral act. A user of insider information obtained in this manner is therefore not only faced with problems of genevat da‘at or ona’ah but also of being a mesayea li-dvar averah -- an accomplice to a forbidden act-theft.
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