In general, a free market only works (even in theory, let's not even get started on the practice of it...) when _there is no assymetry of information_. Otherwise it's just fraud, one party mispricing things because the other party knows something they don't.

It's why we require public companies to disclose their finances. How could a person, even in theory, know whether to invest otherwise? It's why we require sellers of houses to deliver an independent inspection report. Etc etc.

The converse is also why HFT companies make more money than croesus.