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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?

#91

Post by dia80 »

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 had a problem would probably count as the information being public and thus this test is not met and you are free to trade - I think the bar is around 30 people

I knew all those hours spent in compliance training would come in handy one day!

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

#92

Post by kosievdmerwe »

alkonaut wrote: post #82

The interesting case of this question is mentioned in the comments to the question but not answered: what if you are the Boeing CEO, you have a ton of stock, and you are on the flight. Would it be insider information to tell your broker to sell evrything before the plane lands? It’s information about your company not known by the (wider) public but it’s also not information that it’s your job to protect or that you h…

If you're the CEO you're likely not allowed to trade this readily, no matter your reason. High-level execs tend to have to pre-declare sales and purchases months in advance.

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

#93

Post by jihadjihad »

BMc2020 wrote: post #78

Ctrl-F Casino Royale During the film, the terrorist financier Le Chiffre uses a Ugandan warlord's money to short-sell stock in Skyfleet, thus betting the money on the company's failure. The banker plans to bring about said failure by destroying the company's prototype airliner. After his original bomb-maker is killed by James Bond in Madagascar, another is hired to complete the job. The bomb-maker infiltrates Miami I…

> is forced to set up a high-stakes poker tournament at Casino Royale

And take a long pull from that inhaler of his.

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

#94

Post by HWR_14 »

pfdietz wrote: post #55
judge2020 wrote: post #11

Earlier quoted context omitted.

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)

I more hope they're barred from shorting airline stock. :)

They're barred from trading anything the SEC regulates (including options and shorted stock) with regards to airline, airplane manufacturer or airplane part manufacturer stocks. There is an exception allowing them to indirectly own them (like through mutual/index funds).

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

#95

Post by hnbear »

SV_BubbleTime wrote: post #61
hnbear wrote: post #45

Matt Levine covered this well too: https://archive.is/Kd6Os The answer being no, because as a consumer you have no duty of confidentiality.

It’s a better question to see if it meets colloquial definitions of arbitrage. It’s an advantage only a few people have, and you paid something in order to be put in that position.

You paid to be in the plane. I doubt anyone paid specifically to be in a plane with the hope that a door would blow off to take advantage of information asymmetry in the aircraft manufacturer's stock (or the airline's stock).

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

#96

Post by intrasight »

hnbear wrote: post #45

Matt Levine covered this well too: https://archive.is/Kd6Os The answer being no, because as a consumer you have no duty of confidentiality.

What if in the fine print of your ticket purchase was an NDA clause?

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

#97

Post by vintermann »

porphyra wrote: post #85
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…

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?

I know what you're thinking, but no, you still can't push him out.

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

#98

Post by ls612 »

adrr wrote: post #90
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…

What if you infer it from a person that does have a privilege position. Here’s the scenario. During acquisitions, acquiring company sometimes use market research companies to reach out to former execs at the company as part of their diligence. Can you trade long if you just receive a bunch of requests from market research firms but never actually talk to the acquiring company?

Depends on how well connected you are to the establishment whether a prosecutor would try to bring charges on more novel fact patterns. Rule by law vs rule of law and all that.

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

#99

Post by [deleted] »

loeg wrote: post #79
clbrmbr wrote: post #67

Hmm. So a rouge Meta employee could put a barometric pressure monitor in Messenger or WhatsApp (that people use even without paid in-flight wifi) to detect depressurization and automatically short the airline and aircraft manufacturer.

This would probably be violating the employee’s fiduciary duty to Meta.

[deleted]

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

#100

Post by Johnny555 »

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.

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