4 ms·
>My understanding is that trading on non-public info isn't a crime unless both parties benefit. Trading on non public information for a gain is going to land y
by poooogles 9y ago
>My understanding is that trading on non-public info isn't a crime unless both parties benefit.
Trading on non public information for a gain is going to land you in hot water with the SEC.
These two lines on the SEC site [1] define this.
>Corporate officers, directors, and employees who traded the corporation's securities after learning of significant, confidential corporate developments;
>Friends, business associates, family members, and other "tippees" of such officers, directors, and employees, who traded the securities after receiving such information
1. https://www.sec.gov/fast-answers/answersinsiderhtm.html https://www.sec.gov/fast-answers/answersinsiderhtm.html
- dsacco 9y agoThe SEC has established two precedents in this arena to satisfy the "personal benefit" or quid pro quo requirement: 1. Bribery, or a monetary reward, 2. Friendship and good relations. In both cases there must be an unbroken chain of confidentiality compromise. If you legitimately come to know non-public material information about a company and you didn't acquire this information through your own or someone else's confidentiality agreement, you're fine to use it. Information asymmetry couldn't be functionally and profitably exploited if it was literally illegal full stop. You just have to acquire it without breaking a confidentiality duty to your own company and without aiding and abetting someone else in breaking such a duty (e.g. they tell you and you trade).