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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?

#211

Post by arthurcolle »

atkailash wrote: post #171
arthurcolle wrote: post #151

Earlier quoted context omitted.

> 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.

Agreed. It absolutely could be if it’s technically non-public information. That’s the entire point of the regulations. Just because you don’t work for the company doesn’t make it not insider trading if you act off information the company didn’t disclose.

Always funny when the startup geniuses reinterpret securities and broker-dealer rules

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

#212

Post by helsinkiandrew »

dia80 wrote: post #91

UK rules differ from the US there is a 3-point test for insider trading: 1. The information has to be specific - Yes - you should sell Boeing 2. Would a reasonable investor take this information into account when making a decision to trade - Yes - this seems quite clear 3. The information must be non public - IIRC disclosure to a large group of people - in this case the perhaps 200ish people on the plane knowing it h…

There's an interesting real world case of the distinction between US and UK/Europe rules about what is public from a few years ago. Someone acted on information from an overheard phone call on a train and was found guilty by a French court.

https://www.bloomberg.com/opinion/articles/2019-03-29/deals-... Archive https://archive.ph/Imf75

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

#213

Post by tim333 »

loceng wrote: post #143
klyrs wrote: post #123

Earlier quoted context omitted.

I still don't think it counts as insider trading if an outsider sabotages the airplane and buys the puts. The sabotage itself is probably a dozen federal offenses (gasp, terrorism!) resulting in actual prison time; insider trading only gets a slap on the wrist.

Agreed, it wouldn't be insider trading - just fraud - with potential horrible unintended but predictable consequences; of which the person(s) buying the stock around that orchestrated event happens would be complicit in. There's probably far easier and more lucrative ways for clever criminals to execute on though.

I'm not sure it would even be fraud although obviously blowing up airplanes breaks some laws. But on the finance side if you buy calls on a company and then help it be successful in some way I don't think you have broken any laws.

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

#214

Post by nmfisher »

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.

Don't be so quick to assume. In law school in Australia (20+ years ago), they specifically covered this point: third-party/outsider could not legally trade on information that wasn't conceivably available to the wider public (there were more specifics, but that was the gist).

Buying puts inside the plane may very well contravene that law, because there's only a couple of hundred people who theoretically had access to that information. Once it was radioed back to ATC, then it's actually available to the public (irrespective of who is actually listening, much like your satellite imagery).

I'm not saying that's the law in the USA (or that it's still even the law in Australia), but "that's how the law should operate" isn't the same as "that's how the law does operate".

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

#215

Post by teo_zero »

ada1981 wrote: post #155
jasode wrote: post #34

Earlier quoted context omitted.

>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?

Oh right, I had misread the last one. Of course it's no, no, and no.

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

#216

Post by teo_zero »

ada1981 wrote: post #205
teo_zero wrote: post #165

Earlier quoted context omitted.

No, no, and yes.

Do you mean no, no, and no? #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.

Of course you're right, I had misread the third question.

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

#217

Post by growse »

arthurcolle wrote: post #209
resist_futility wrote: post #191

Earlier quoted context omitted.

How would a random person know if that information was MNPI? How could you possibly prove that someone knew it was?

Ignorance of the law is not an excuse for misconduct

This has nothing to do with ignorance of the law, it's about intent.

You can be fully versed in insider trading law, receive some information that you reasonably assume isn't protected, trade on it, and that's not insider trading.

If that weren't the case, every single person who traded a stock after some MNPI was inadvertently broadcast/published would be guilty of insider trading.

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

#218

Post by EasyMark »

choeger wrote: post #139

A hacker news post to a stack exchange question copied from reddit? At some point we might simply fuse these networks into one, don't we?

no, think of it as a distributed network with manual switching (changing browser tabs, data cached/queued up in your brain)

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

#219

Post by Detrytus »

francisofascii wrote: post #179
ehsankia wrote: post #156

Earlier quoted context omitted.

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.

But the customer was literally “inside” the problematic plane. :)

But the plane is owned by the airline, not the manufacturer, so they are inside a Boeing, but they are not a Boeing insider.

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

#220

Post by tomp »

arthurcolle wrote: post #210
tomp wrote: post #192

Earlier quoted context omitted.

> because trading on the basis of MNPI is itself illegal "yes" in Europe, "no" in the US

I'm sorry but you are wrong. Russia is the only country that I know of that does not follow "common understanding" of insider trading

Do you ever bother reading?

https://en.wikipedia.org/wiki/Insider_trading#Legal_differen...

> The principle is that it is illegal to trade on the basis of market-sensitive information that is not generally known. This is a much broader scope than under U.S. law. The key differences from U.S. law are that no relationship to either the issuer of the security or the tipster is required; all that is required is that the guilty party traded (or caused trading) whilst having inside information

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