Your questions answered

If insider trading is so bad, why were laws in Australia only passed against it in 1970?

Of course, this is exactly the type of thinking that gets economists into trouble - claiming efficiency as an end in itself and conveniently ignoring the far more established values of fairness and equality. In truth, insider trading hurts shareholders on the 'outside' because they are denied the opportunity to make a profit, or avoid a loss, by the action of the insiders. Ordinary investors have long railed against such practices but it took a while for their voices to be heard. Then the Poseidon boom of 1969 swung the balance. These days the Corporations Law allows civil actions by aggrieved shareholders against insider traders. This allows plaintiffs to recoup the damage, measured in terms of lost profits, which the inside trades can be said to have inflicted on them. This hasn't eradicated the practice though - it's still pretty common.

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