The argument can be made that insider trading isn’t actually a bad thing as long as it’s legal, precisely because allowing that information to trickle into the markets destroys alpha. Anyone who thinks hedge funds aren’t constantly trading on insider information has their head in the sand.

Of course then you have problems where people with private information are incentivized to leak that information, which is bad for national security and other areas where secrecy is needed, but we already have laws protecting that information without adding insider trading to them.

It would need to be studied and to my knowledge no one has done that work yet, but I haven’t seen anyone establish why insider trading is a net bad for society, other than intuitive reasoning.