However, the term is frequently used to refer to a practice in which an insider or a related party trades based on material non-public information obtained during the performance of the insider's duties at the corporation, or otherwise in breach of a fiduciary or other relationship of trust and confidence or where the non-public information was misappropriated from the company

According to Mr. Manne, corporate scandals such as Enron and Global Crossing would occur much less frequently and impose fewer costs if the government didn't prohibit insider trading. As Mr. Manne said a few years ago in a radio interview, "I don't think the scandals would ever have erupted if we had allowed insider trading because there would be plenty of people in those companies who would know exactly what was going on, and who couldn't resist the temptation to get rich by trading on the information, and the stock market would have reflected those problems months and months earlier than they did under this cockamamie regulatory system we have."

Another potential benefit of lifting the ban on insider trading is explained by Harvard University economist Jeffrey Miron: "In a world with no ban, small investors might fear to trade individual stocks and would face a greater incentive to diversify; that is also a good thing."

Insider trading, moreover, is held to be morally suspect not because its overall value to the society is denied but because many regard fairness, equality, a level playing field, the most important criteria for a morally decent marketplace. The fact is that those are actually not what counts most for the morality of trade. That place is occupied by the respect for individual rights. Within the framework of such respect, insider trading is entirely unobjectionable. In addition, it can be perfectly ethically, commendable, to act based on such information: it is a matter of prudence and commercial savvy, both of which should be encouraged from those who work for a living.