When an insider trades in his own corporation’s stock while in possession of material, nonpublic information, courts apply what is called the “classical theory” of insider trading. This theory is the foundation of U.S. insider trading law. It has been invoked in every court opinion on the subject for the past three decades. Yet, this Article argues that the theory is an unqualified failure. The reason? Because it fails to do what a theory must, which is to explain settled law and provide answers to unsettled law that are intuitively appealing. We need a new theory for the classic case of insider trading, and the best candidate for the job is staring us in the face—the misappropriation theory, which historically has applied only to insider trading involving corporate “outsiders,” is superior to the classical theory.