Here's an interesting question floating around the Internet today:

Assume that LeBron James knows that when he becomes a free agent on July 1, 2010, he intends to sign with the New York Knicks. Would it be insider trading if between today and July 1, James started buying stock in publicly-traded Madison Square Garden, Inc. knowing that MSG stock would likely surge on the news of his signing?

Ater talking to some lawyers, Michael Salfino of SNY.tv says such purchases would not be illegal (but would be "immoral"):

Since James is not and will not be an officer of MSG, that's not insider trading, as several sources understand the law. But it's immoral because in every transaction that basically amounts to insider trading (irrespective of the legal definition) someone wins and someone loses. It's zero sum. So James would be making the quick buck on the backs of whoever sold him the stock without knowing that James was the buyer with the insider knowledge that James clearly has. The victims could be pension funds that represent retirees, cops, fireman, widows, orphans and more. You understand the ensuing PR nightmare.

Off the top of my head, I think I agree with this analysis on the legal issue: James would have no duty to the company here as an insider, and would not be misappropriating anyone's information.

What do other people think? Legal or illegal?