, SteveRichter wrote

*snip*

In this case the public would be alerted to the serious problems in the product by the sudden movement in the stock price. Getting the news via the indirect route of the short seller would likely be the quickest way for the public to be informed.

Aside satisfying your dogmatic belief about the role "central government", what benefit is there to be gained by legalizing insider trading (never minding the absurdity of the notion to begin with)?