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For example, suppose that instead of flying planes into the World Trade Center, Osama bin Laden had decided to fly planes into Microsoft Campus. He can therefore predict with high confidence that MSFT will crash. Can he legally buy MSFT puts prior to the event?

Related: Can someone short a stock if they have information that is likely to cause the stock to drop? But the scenario above seems significantly more dramatic than the one described in this question (in particular, flying planes into Microsoft Campus is illegal).

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    Does this answer your question? Can someone short a stock if they have information that is likely to cause the stock to drop?
    – Trish
    Commented Mar 2 at 17:19
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    "Osama bin Laden had decided to fly planes into Microsoft Campus" considering that's far more illegal (as in, much higher priority to deal with and far heavier consequences) than insider trading, would it effectively matter?
    – Mast
    Commented Mar 3 at 8:59
  • There was suspicion that parties with foreknowledge of the 9/11 attacks did exactly that. The investigation afterwards documented in the report showed that the higher than average sale of airline industry puts shortly before 9/11 was a coincidence. But they took the possibility seriously.
    – Eric Lippert
    Commented Mar 3 at 17:57
  • Can you be a lot more specific, please? Who are you, or in what capacity are you operating? What 'something' might cause a price to move? How could you know, rather than merely hoping or suspecting the price would move? After all that stuff, how could the powers that be prove that you knew, or how?
    – Robbie Goodwin
    Commented Mar 3 at 20:04
  • @RobbieGoodwin what kind of answer are you looking for? In this case I'm a terrorist, I'm acting on my own behalf, and I'm about to blow up Microsoft Campus for ideological reasons. Since I'm destroying Microsoft property, I can predict with reasonable confidence that MSFT will drop, and so can the powers that be.
    – Allure
    Commented Mar 6 at 6:20

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The question doesn't have an answer at the level of generality at which it is posed in the title. Sometimes it is legal, sometimes it isn't.

In the narrow sense, if Osama bin Laden did that, it would probably have constituted securities fraud through market manipulation (not insider trading) in addition to terrorism, solicitation of mass murder, airline hijacking, an act of war, etc.

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