4 ms·

if that were the case, it would be legal for a company director to trade on information they gleaned from an internal meeting. Which, as far as I understand, it

if that were the case, it would be legal for a company director to trade on information they gleaned from an internal meeting. Which, as far as I understand, it isn't.

mruts 8y ago
That’s theft from the corporation they work for. GP is 100% correct in this case. Just read Matt Levine’s Money Stuff. He goes over this stuff a lot.
- EpicEng 8y ago
  I'm not disagreeing with you because I have no clue about this stuff, but man that is an odd usage of the word 'theft'. Sounds more like improper use to me, e.g., getting a speeding ticket while using a company truck. I didn't steal the truck, but I used it in a way which is unlawful.
  - jmalicki 8y ago
    It's more like you were authorized to drive the truck to make deliveries, but you used it to pick up your kids from school and go grocery shopping without your employer's permission, causing wear and tear on the truck that caused economic damage to your employer without their permission.
    - EpicEng 8y ago
      Ok, but the point is that, in either case, the driver isn't going to be charged with motor vehicle theft.
      - jessaustin 8y ago
        Don't assume that insider trading laws make sense...
  - deleted 8y ago
    [deleted]
  - mruts 8y ago
    Well, say your company is going to buy another company. You know about it, and buy shares of tbe other company ahead of the public anouncement. You are essentially stealing from your own company, since your purchase of shares will drive up price and result in your employer paying more than they otherwise would have. Though for the record, I think insider trading should be legal, or at least should be a civil instead of a criminal matter. The purpose of financial markets is decentralized price discovery and preventing the trading of certain types of non-public information is totally counterproductive in that regard.
JumpCrisscross 8y ago
> if that were the case, it would be legal for a company director to trade on information they gleaned from an internal meeting That’s theft of company (read: shareholders’) information by a fiduciary. Remember: America has no statute barring insider trading. The rules were developed through case law. (There’s a hypothetical of “if a company insider shouts material nonpublic information on the street and you trade on it, is that insider trading” that lawyers love to opine on, but to my understanding that’s never come up in court.) This is a common misunderstanding with respect to insider trading.
- ben509 8y ago
  The 1933 Securities Act, 1934 Securities Exchange Act and the Sarbanes-Oxley Act of 2002 all directly address insider trading.
  - JumpCrisscross 8y ago
    In very limited ways. For example, the 33 Act bans short-swing trading and certain specific activity by holders of more than 10% of a stock. The vast majority of insider trading enforcement is brought forth on securities antifraud and fiduciary obligation statute interpreted through extensive case law.
    - ben509 8y ago
      That's fair, but it's also generally how the modern regulatory state works: Congress lays out a rough sketch of the laws and regulatory agencies and courts hash out the details. And counting incidences of enforcement doesn't tell you where the bulk of doctrine is since someone who plainly violates the law is quickly shut down, while the authorities are forced to play cat and mouse with the ones who skirt the law.
  - throwawaymath 8y ago
    No, they all address illegal insider trading. If all forms of legitimate trading on material nonpublic information were illegal, then information asymmetry in the market would be outlawed. That would make it impossible to legally profit using any kind of financial research.

if that were the case, it would be legal for a company director to trade on information they gleaned from an internal meeting. Which, as far as I understand, it isn't.

mruts 8y ago

That’s theft from the corporation they work for. GP is 100% correct in this case. Just read Matt Levine’s Money Stuff. He goes over this stuff a lot.

EpicEng 8y ago
I'm not disagreeing with you because I have no clue about this stuff, but man that is an odd usage of the word 'theft'. Sounds more like improper use to me, e.g., getting a speeding ticket while using a company truck. I didn't steal the truck, but I used it in a way which is unlawful.
- jmalicki 8y ago
  It's more like you were authorized to drive the truck to make deliveries, but you used it to pick up your kids from school and go grocery shopping without your employer's permission, causing wear and tear on the truck that caused economic damage to your employer without their permission.
  - EpicEng 8y ago
    Ok, but the point is that, in either case, the driver isn't going to be charged with motor vehicle theft.
    - jessaustin 8y ago
      Don't assume that insider trading laws make sense...
- deleted 8y ago
  [deleted]
- mruts 8y ago
  Well, say your company is going to buy another company. You know about it, and buy shares of tbe other company ahead of the public anouncement. You are essentially stealing from your own company, since your purchase of shares will drive up price and result in your employer paying more than they otherwise would have. Though for the record, I think insider trading should be legal, or at least should be a civil instead of a criminal matter. The purpose of financial markets is decentralized price discovery and preventing the trading of certain types of non-public information is totally counterproductive in that regard.

JumpCrisscross 8y ago

> if that were the case, it would be legal for a company director to trade on information they gleaned from an internal meeting That’s theft of company (read: shareholders’) information by a fiduciary. Remember: America has no statute barring insider trading. The rules were developed through case law. (There’s a hypothetical of “if a company insider shouts material nonpublic information on the street and you trade on it, is that insider trading” that lawyers love to opine on, but to my understanding that’s never come up in court.) This is a common misunderstanding with respect to insider trading.

ben509 8y ago
The 1933 Securities Act, 1934 Securities Exchange Act and the Sarbanes-Oxley Act of 2002 all directly address insider trading.
- JumpCrisscross 8y ago
  In very limited ways. For example, the 33 Act bans short-swing trading and certain specific activity by holders of more than 10% of a stock. The vast majority of insider trading enforcement is brought forth on securities antifraud and fiduciary obligation statute interpreted through extensive case law.
  - ben509 8y ago
    That's fair, but it's also generally how the modern regulatory state works: Congress lays out a rough sketch of the laws and regulatory agencies and courts hash out the details. And counting incidences of enforcement doesn't tell you where the bulk of doctrine is since someone who plainly violates the law is quickly shut down, while the authorities are forced to play cat and mouse with the ones who skirt the law.
- throwawaymath 8y ago
  No, they all address illegal insider trading. If all forms of legitimate trading on material nonpublic information were illegal, then information asymmetry in the market would be outlawed. That would make it impossible to legally profit using any kind of financial research.