I don't want to sound like a crybaby, but it definitely isn't fair that some people can profit from inside information. The practice needs to be stopped. Period.

That's easier said than done, however. The Securities and Exchange Commission (SEC) is reportedly investigating trading of Schering-Plough's (NYSE:SGP) shares, which rose 8% on the last trading day before Merck (NYSE:MRK) announced that it was going to acquire Schering. While they're at it, the agency should look at Dendreon's (NASDAQ:DNDN) 16% climb the day before it released positive top-line data for its revolutionary prostate cancer treatment, Provenge. Did someone know the results before the release and profit from that?

Biotech may be the sector most susceptible to insider trading because there are so many binary events -- clinical trials and Food and Drug Administration approvals, for instance -- that can drastically change the stock price of a company in a very short time frame. Except for acquisitions -- and the SEC has investigated those before, like General Electric's (NYSE:GE) acquisition of bomb-detector InVision, for example -- I can't think of anything else that can effect a positive change on a stock's price so quickly.

I'm not sure what the solution to the problem is. The lure of easy money is always going to attract unscrupulous people. Companies can (and should) do their part by limiting the number of people who need to know the news. Keeping a secret is difficult and one has to wonder if that's the reason that someone close to the Pfizer (NYSE:PFE) and Wyeth (NYSE:WYE) deal might have leaked the information to the media. That way at least investors could all trade the rumor together.

The reason that insider trading is so rampant is that it's hard to detect, first of all, and hard to then prove. Sure, occasionally the Martha Stewarts of the world go down for getting information from CEO friends and then not cooperating with officials, but I'd guess they're the minority. For every trade of ImClone -- now part of Eli Lilly (NYSE:LLY) -- that ends in a prosecution, I'm willing to bet there's tens and possibly hundreds of trades by people who have information but shouldn't be using it.

Maybe Congress needs to throw more money at the SEC so that it has the resources to track down and prosecute the criminals. Maybe we need a little more integrity in this country. Call me a whiner if you must, but someone needs to look out for the little guy.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.