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But so can anyone really. People watching all this have no control over the door actually falling off.
Insiders have the ability to shift the course of the company. So the reason why we have this law is so that insiders don’t short their own stocks and then run the company into the ground, making guaranteed profits from that at the expense everyone else.
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…
If she put it on twitter could she legally trade on the tip? If I saw the tweet and trade is that legal?
IANAL, but if she traded a picosecond after tweeting: no. If she has zillions of followers and traded a year later: yes, because ’the public’ could be aware of the content of the tweet. A judge will have to decide on in-betweens. When doing that they likely will take into account how open Twitter/X is.
> If I saw the tweet and trade is that legal?
Again, IANAL, but I would think so, if she has ‘enough’ followers.
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.
Like if you were mechanic for the airline and got message that we will be landing with missing door. And then traded stock of airline on that information. Being in the crew of the plane might get more messy at least when done with airline. Boeing less so.
The pilot, flight attendants, air traffic control, EMTs, etc. They have no direction association with Boeing, yet you could make an argument it was part of their responsibilities.
On the other hand, if your employer gives you X-brand wrenches, which frequently fall apart in your hands during routine operation, that seems like actionable information on which you would be justified to act.
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…
Theft from the company is the central tenet, whether you are an insider, have a fiduciary responsibility, or an outsider who comes across data from inside the company.
Material nonpublic information that isn't taken from the company is fair game, thus all the quant funds that collect detailed market intelligence and trade on it (or the posted example, a passenger on the plane who knew the news ahead of the public). It doesnt matter one whit whether the information was material or public, it matters only that it wasn't taken from Boeing
EDIT: I was involved in the early days of a company that sold data to quant funds, and spent many hours with lawyers on exactly this question
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)
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…
You're muddying the waters here, the original poster is correct, but with a few scenarios for outsiders. For example, a company that printed the financial statements of companies, had no NDAs, was trading on the data, and was convicted of insider trading because they knew the data was company confidential information. Theft from the company is the central tenet, whether you are an insider, have a fiduciary responsibi…
Further, I struggle to understand how one could learn information which is non-public without "theft" of that information. It would seem that, by definition, if the organization begins sharing that information with individuals who have no confidentiality obligation, they have now made that information public.
What does tend to happen often is that others assume "public" means "written in the news" and that is certainly not the case. There are plenty of things that are knowable by the public but not obvious, and it's perfectly fine to trade on that.
Earlier quoted context omitted.
>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?
As a random individual, almost certainly. I can do lots of (legal) things to ferret out information that is theoretically public but which isn't actually widely known. As an insider it's more complicated as I understand it. A company I worked for had a no trade window around earnings reports. The idea is that not only couldn't you trade on advance information but you also couldn't trade before investors had time to p…
https://www.theverge.com/2013/10/3/4798542/whats-faster-than...
I’m not sure that not being a tippee means you’re completely in the clear, since you have material information. But it’s presumably not non-public information since hundreds of people know it, and thousands more are finding out by the minute.
It's not if you don't have a fiduciary duty to Boeing.
That's not correct. If you trade on information tipped to you by insiders, you are also guilty of insider trading, even though you didn't have any fiduciary duty towards the company.