There Are Ways a Hedge Fund Could Use Inside Information Legally

The government is convinced that money managers who consistently beat the market are probably using insider information to produce these abnormal returns. Unfortunately for prosecutors who want to shut this kind of thing down, one way this is done is perfectly legal. One of the ways for a hedge fund manager to beat the market is to avoid buying stocks ahead of bad news about a company. You can beat the market with a diversified portfolio that avoids buying stocks in companies that underperform. ...