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Is it insider trading if I bought Boeing puts while inside the wrecked airplane?

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Re: Is it insider trading if I bought Boeing puts while inside the wrecked airplane?

#11

Post by judge2020 »

ghaff wrote: post #4

IANAL, but I don't see how. If you're just an ordinary person, you're trading based on an event you witnessed in the course of going about your life. No different I would think than if you witnessed a plane crash. You might be investigated though if the amounts were large enough. It gets much more complicated I would think if you were an air traffic controller or otherwise learned about it in a professional capacity.

I think it's mostly a joke, the original post is from Reddit r/WallStreetBets.

But regarding Air Traffic controllers, it appears they are barred from owning airline stock https://www.law.cornell.edu/cfr/text/5/6001.104 (b)

Re: Is it insider trading if I bought Boeing puts while inside the wrecked airplane?

#12

Post by phkahler »

ghaff wrote: post #4

IANAL, but I don't see how. If you're just an ordinary person, you're trading based on an event you witnessed in the course of going about your life. No different I would think than if you witnessed a plane crash. You might be investigated though if the amounts were large enough. It gets much more complicated I would think if you were an air traffic controller or otherwise learned about it in a professional capacity.

>> It gets much more complicated I would think if you were an air traffic controller or otherwise learned about it in a professional capacity.

I think even a Boeing employee would not be guilty. The event happened in public and it should make no difference since the non employee next to them would not be trading on insider info either. The information did not come from inside the company.

Re: Is it insider trading if I bought Boeing puts while inside the wrecked airplane?

#13

Post by antasvara »

ghaff wrote: post #4

IANAL, but I don't see how. If you're just an ordinary person, you're trading based on an event you witnessed in the course of going about your life. No different I would think than if you witnessed a plane crash. You might be investigated though if the amounts were large enough. It gets much more complicated I would think if you were an air traffic controller or otherwise learned about it in a professional capacity.

>It gets much more complicated I would think if you were an air traffic controller or otherwise learned about it in a professional capacity.

IANAL, but I am curious if ATC radio communications are considered public. My understanding is that it is legal to listen to ATC radio; if that's the case, is the plane crashing "public information" right after you relay the info over the radio?

Re: Is it insider trading if I bought Boeing puts while inside the wrecked airplane?

#14

Post by arsome »

KieranMac wrote: post #9

No, it is not. If you do not have a fiduciary relationship with Boeing and you have no confidentiality obligations with respect to the information, you are not trading on inside information. If you're in the plane when the door blows up, you're just the first person with material public information. You're not trading on material non-public information. See, e.g. https://www.law.cornell.edu/wex/misappropriation_theor…

This is just news trading, you're just really fast because you're the headline.

Re: Is it insider trading if I bought Boeing puts while inside the wrecked airplane?

#15

Post by labrador »

KieranMac wrote: post #9

No, it is not. If you do not have a fiduciary relationship with Boeing and you have no confidentiality obligations with respect to the information, you are not trading on inside information. If you're in the plane when the door blows up, you're just the first person with material public information. You're not trading on material non-public information. See, e.g. https://www.law.cornell.edu/wex/misappropriation_theor…

I love answers like this because it clears up confusion in few words and makes the answer obvious in retrospect

Re: Is it insider trading if I bought Boeing puts while inside the wrecked airplane?

#17

Post by philwelch »

This is a good opportunity to point out that insider trading is a victimless crime. If you sell stock with insider knowledge, you sell it to someone who would have happily bought it at the same price or possibly a higher price from someone else anyway. The same is true if you buy stock with insider knowledge. The only net effect of insider trading is to make the market more efficient by pricing in otherwise inaccessible information.

Re: Is it insider trading if I bought Boeing puts while inside the wrecked airplane?

#18

Post by colinmorelli »

KieranMac wrote: post #9

No, it is not. If you do not have a fiduciary relationship with Boeing and you have no confidentiality obligations with respect to the information, you are not trading on inside information. If you're in the plane when the door blows up, you're just the first person with material public information. You're not trading on material non-public information. See, e.g. https://www.law.cornell.edu/wex/misappropriation_theor…

Important clarification: you do not need to have confidentiality obligations with respect to the information or a fiduciary relationship, it need only be information that is material and non-public information that belongs to the company (i.e. only available to those with a fiduciary responsibility or confidentiality obligation to the company). If an insider with confidentiality obligations shares material non-public information with a person who has no confidentiality obligation, and that person trades on that information, that would be insider trading.

The link you referenced also clarifies this point, but it is different from what is written in your comment.

Note: this doesn't change the fact that the answer in this particular case is no, it's not insider trading. You are, as parent mentioned, just the first to know the news.

Re: Is it insider trading if I bought Boeing puts while inside the wrecked airplane?

#19

Post by cedws »

I've been thinking about building a system that would enable me to quickly react to black swan events like this should they happen around me in daily life. The problem is that most of my funds are in savings accounts that take 1-2 business days to withdraw from, so I'd have to keep them in accounts that are faster to access.

Also, this information that the passengers had in advance could have been worth millions in the right hands. If you had information like this, how could you quickly find parties interested in buying this information or giving you a share of potential gains?

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