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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?

#151

Post by arthurcolle »

Retric wrote: post #129
colinmorelli wrote: post #18

Earlier quoted context omitted.

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…

That’s not quite correct, it depends on the nature of the disclosure. Someone receiving information from an insider needs be independent of personal, financial, and quid pro quo relationships. So a random person that happens to sit next to a CEO on an airplane can trade on whatever they hear. The CEO’s mistress sitting on the other side of them can’t.

> So a random person that happens to sit next to a CEO on an airplane can trade on whatever they hear.

I am under the impression that this would also be illegal, because trading on the basis of MNPI is itself illegal, irrespective of insider/outsider status.

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

#152

Post by cozzyd »

kevinmchugh wrote: post #29
philwelch wrote: post #17

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 inaccessi…

If I work for Apple and I'm on the special secret new Apple Glasses project, I reasonably know that when the product is announced the stock is going to go up. That information belongs to Apple, not me. Apple could sell more shares to capitalize on the announcement. By buying shares before the announcement, I'm capturing some of the gain that should be Apple's.

Or if you are in a position where you can sabotage it somehow (introduce a bug in an update that calls the HCF instruction)...

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

#153

Post by flipbrad »

jeffbee wrote: post #149
Retric wrote: post #129

Earlier quoted context omitted.

That’s not quite correct, it depends on the nature of the disclosure. Someone receiving information from an insider needs be independent of personal, financial, and quid pro quo relationships. So a random person that happens to sit next to a CEO on an airplane can trade on whatever they hear. The CEO’s mistress sitting on the other side of them can’t.

This exact scenario happened to me. I was flying United business class SFO to EWR and the guy next to me was writing a Powerpoint slide in 9000-point bold type "BUY XYZ CORP FOR 880 MILLION" and when I got to work a few hours later our counsel advised me that it was not at all improper to trade on that information, which we did.

The absolute first thing I ever do when publicly working on a doc like that (if I absolutely must) is Ctrl+r any trademarks, swapping them for [#x].

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

#154

Post by zymhan »

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 wasn't a question being posed to HN readers, it's a StackExchange post.

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

#155

Post by ada1981 »

jasode wrote: post #34
ClumsyPilot wrote: post #24

Earlier quoted context omitted.

> it need only be information that is material and non-public. I think this is wrong as well. Suppose you are a independent technician repairing cars. Over time you notice, that, say BMW car quality used to be good but has gone to shit. That's not public information, but you would be allowed to short BMW stock in the hopes that, once public catches on, their share price will tank. In fact half the point of stock trad…

>I think this is wrong as well. The gp's wording is a little confusing but he's just trying to explain the transitive logic of non-public information transferring from a "true insider" to an outsider is also "insider trading" and thus illegal. Think of it as the provenance of information coming from an insider. E.g. Martha Stewart is an "outsider" and not an insider of drug company ImClone but she was found guilty of…

I’m curious about trading on your supply chain partners.

Can Apple buy stock in a chip manufacture before they sign a deal with them?

Can they short them before not renewing a contract?

Another way of asking, is trading other companies based on insider knowledge from your company legal?

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

#156

Post by ehsankia »

jedberg wrote: post #122

Of course not, because you learned the information yourself as an outsider. Just like the hedge funds that pay for satellite images of all of the WalMart parking lots in the country and count the cars to estimate year over year sales. It's information they have that no one else does, but they didn't get it from an insider.

Exactly. It's literally called "insider trading". There's nothing "insider" about an customer discovering something about the company's product while using it. The source of the information was not from "inside" the company.

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

#157

Post by gnicholas »

Johnny555 wrote: post #100
gnicholas wrote: post #59

I recall learning in law school that “if there is no tipper there can be no tippee”. In order for there to be a tipper, the person has to have an intent to provide a tip improperly. Imagine there’s a CEO talking in an obscure foreign language in his own backyard, to a colleague on the phone, he is not a tipper — even if someone who happens to speak that obscure language is walking by his fence at that moment. As a re…

>Imagine there’s a CEO talking in an obscure foreign language in his own backyard, to a colleague on the phone, he is not a tipper Is that actually true? I could believe it if he were speaking in a cryptographic code, but even an obscure language has more than one speaker so he shouldn't be revealing corporate secrets where he can be overheard even if he's speaking a foreign language.

Technically he wouldn’t be a tipper (vis a vis the stranger on the other side of the fence) even if he were speaking English. To be a tipper one has to have intent to share the information inappropriately. I only included the language bit to make it clear he was taking some level of precaution, and had a reasonable expectation that he was not spreading the information around. Even carelessness does not make one a tipper vis a vis a stranger, IIRC. But it’s been a couple decades since law school, so I could be wrong, laws could have changed, etc.

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

#158

Post by jeffbee »

flipbrad wrote: post #153
jeffbee wrote: post #149

Earlier quoted context omitted.

This exact scenario happened to me. I was flying United business class SFO to EWR and the guy next to me was writing a Powerpoint slide in 9000-point bold type "BUY XYZ CORP FOR 880 MILLION" and when I got to work a few hours later our counsel advised me that it was not at all improper to trade on that information, which we did.

The absolute first thing I ever do when publicly working on a doc like that (if I absolutely must) is Ctrl+r any trademarks, swapping them for [#x].

Seems good. But I also feel like if you're the kind of person who can command the disposition of a billion dollars, just stop writing slides. Stand up in front of the board and say what you came to say and then sit back down.

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

#159

Post by Mtinie »

arthurcolle wrote: post #151
Retric wrote: post #129

Earlier quoted context omitted.

That’s not quite correct, it depends on the nature of the disclosure. Someone receiving information from an insider needs be independent of personal, financial, and quid pro quo relationships. So a random person that happens to sit next to a CEO on an airplane can trade on whatever they hear. The CEO’s mistress sitting on the other side of them can’t.

> So a random person that happens to sit next to a CEO on an airplane can trade on whatever they hear. I am under the impression that this would also be illegal, because trading on the basis of MNPI is itself illegal, irrespective of insider/outsider status.

In the specific hypothetical case mentioned, wouldn’t that constitute “public” information if it was overheard in a non-controlled location?

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

#160

Post by evan_ »

jeffbee wrote: post #149
Retric wrote: post #129

Earlier quoted context omitted.

That’s not quite correct, it depends on the nature of the disclosure. Someone receiving information from an insider needs be independent of personal, financial, and quid pro quo relationships. So a random person that happens to sit next to a CEO on an airplane can trade on whatever they hear. The CEO’s mistress sitting on the other side of them can’t.

This exact scenario happened to me. I was flying United business class SFO to EWR and the guy next to me was writing a Powerpoint slide in 9000-point bold type "BUY XYZ CORP FOR 880 MILLION" and when I got to work a few hours later our counsel advised me that it was not at all improper to trade on that information, which we did.

Well, I’ve figured out how I’m spending my spring break- buy a ton of cheap stock in some random startup, dress head-to-toe in Microsoft swag, and then spend a few days hanging out in various SFO lounges working on fake PowerPoints declaring intent to buy the startup
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