For other crimes, we accept various imperfections in the judicial system. After all, murder is really bad, and the facts that some murders go unsolved while others are pinned on innocents don't cause us to reconsider our laws against murder. The imperfections don't make the problems posed by murder worse for everyone than would not enforcing the laws at all. (Convicted innocents are an important exception, but let's set them aside in this discussion.)

I consider insider trading laws to be of a different nature. As mentioned above, these laws create a situation in which naive investors suffer more harm and self-serving executives reap more gain than they would in the absence of these laws. Without insider trading laws, new "inside" information would set off a race on the part of all knowledgeable insiders to profit from that information, thereby quickly informing the broader market. The positions of public firms would be much clearer, to every investor. Investors could still gain or lose money in the market, but executives could no longer structure their investments and incentive packages over the medium term so as to profit most directly from their inside knowledge.

In this new more permissive regime, I'm sure some executives would attempt some straight-up shareholder robbery. But the speed required to succeed at such schemes would make their actions obvious to the investing public, to prosecutors interested in charging more prosaic crimes like fraud, and to tort lawyers interested in breach of contract. After a time we'd have at least some executives who had been incentivized toward honesty enough to actually become generally honest.