Have you ever heard of insider trading? If not, a definition would be appropriate. Generally speaking, it refers to using non public information to financially benefit from a transaction before the general public becomes aware of such knowledge.

If you ask anyone in the securities industry (i.e. someone involved with stocks, bonds, debentures, etc) whether it is legal, you will get a resounding no because it could lead to fines and/or imprisonment if caught. Many people have gone to jail for acting on a hot stock tip and ended up paying heavy fines.

In real estate, it is a completely different issue. If you hear of a property which has a million dollar valuation that a seller wants $800,000 for and you purchase it before it is ever on the market, it is not only legal but rather savvy! Acting on non public information will put you in the lead for finding the best deals.

Ultimately, the answer as to whether insider trading is legal depends on which asset class you are talking about, securities or real estate?