What stops from former workers at intelligence agencies from starting a hedge fund and employing all methods they learned while at work, to acquire such valuable information, trade based on that and offer others money management services?
That wouldn't be insider trading. Indeed hedge funds are known to use intelligence data like satellite photos etc.
If they use illegal monitoring devices, hacking for info etc, they may fall afoul of federal espionage, wiretapping or CFFA, but it would still not be insider trading.
Thats an interesting point, if I hack the CEO’s phone and get the earnings number a day ahead, then trade off them, I kind of wonder how that isnt insider information.
Although laws around that are so odd, especially in US, that it wouldn’t surprise me.
(not a lawyer, not legal advice)
that would still be trading on material non public information which is prohibited.
Note also that there are difference between US and EU. I think US might require a breach of duty of care somwhere in the chain of responsibilities for insider trading, while EU doesn't.
There isn’t an inherent legal issue here
Insider trading also requires you or the person you got information from to have a fiduciary or contractual duty not to share information
That typically ends after employment or when the NDA expires
There is nothing illegal about having an advantage in the market, if thats the assumption where you are starting from