201–210 of 227 posts
Of course it’s not insider trading. My question is how did this make it to the top of the HN front page? It reads like something you might see on WallStreetBets.
You're right, that's the original source of the question https://www.reddit.com/r/wallstreetbets/comments/1935frs/is_...
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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…
What if you are on a plane and door blows out but the only other passenger on the plane happens to be a Boeing exec by sheer coincidence?
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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…
> 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…
https://www.compliancebuilding.com/2014/02/06/working-on-the...
Roadroad workers notice a bunch of visitors in suits, boss asked them to put together an inventory of property.
So they thought the company was going to be sold and profited on it.
SEC charged them, courts found them not guilty of insider trading.
[1]: https://www.theonion.com [2]: https://www.mcsweeneys.net
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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?
No, no, and yes.
#3 is a general case of specific cases 1 & 2.
I don’t think 3 can be a yes if 2&3 are a no.
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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.
"I heard a rumour that their defect rate is very high for this new product."
Information that isn't meant to be public might still send up circulating sure to mistakes etc. How would you determine whether trading based on it would be legal or not?
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> 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.
> because trading on the basis of MNPI is itself illegal "yes" in Europe, "no" in the US
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> 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.
But how does this square with rumors? Is trading based on rumors illegal then? "I heard a rumour that their defect rate is very high for this new product." Information that isn't meant to be public might still send up circulating sure to mistakes etc. How would you determine whether trading based on it would be legal or not?
Hearing and trading on a specific statement by an insider at a public company, as an outsider, is insider trading. It's not that complicated
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> 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.
How would a random person know if that information was MNPI? How could you possibly prove that someone knew it was?
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> 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.
> because trading on the basis of MNPI is itself illegal "yes" in Europe, "no" in the US