5 ms·
There's a personal benefit test: if the insider didn't gain anything from giving you the information, you can legally trade on it. See https://www.sec.gov/news
by ikeboy 10y ago
There's a personal benefit test: if the insider didn't gain anything from giving you the information, you can legally trade on it.
See https://www.sec.gov/news/speech/speecharchive/1998/spch221.htm https://www.sec.gov/news/speech/speecharchive/1998/spch221.h..., http://www.bloomberg.com/view/articles/2016-01-19/justices-will-know-insider-trading-when-they-see-it http://www.bloomberg.com/view/articles/2016-01-19/justices-w..., and https://www.bloomberg.com/view/articles/2014-12-10/appeals-court-not-so-keen-on-insider-trading-crackdown https://www.bloomberg.com/view/articles/2014-12-10/appeals-c...
Or https://www.bloomberg.com/view/articles/2016-05-20/insider-trading-law-comes-for-more-golf-buddies https://www.bloomberg.com/view/articles/2016-05-20/insider-t... for a recent example
- blowski 10y agoFascinating. Thanks for the links. These cases seem to be more evidence for how the system is rigged in favour of the elite.
- jonknee 10y agoThat said, a technically legal inside tip based trade can certainly face the wrath of the SEC and leave you on the hook for a ton of legal bills.
- ikeboy 10y agoIf it's clearly against previous precedent, they wouldn't prosecute, that just wastes their resources.
- jonknee 10y agoIn theory, but that's not a theory I'd like to test personally. In cases that they do bring it frequently comes down to arguments about who received benefit. Sometimes it's as little as status/friendship.
- ikeboy 10y agoNot since Newman, which explicitly found that a friendship is not enough.
- dwaltrip 10y agoDoes winning a person's good will and thus the likelihood of them doing favors for you in the future not count?
- ikeboy 10y agoIt depends on the court, and how clearly a quid pro quo can be established.