4 ms·
That's the most cynical way to look at it. Another way is, a guy discovered a huge fraud and planned to make it public. A hedge fund offered to pay him a pile o
by tlb 7y ago
That's the most cynical way to look at it. Another way is, a guy discovered a huge fraud and planned to make it public. A hedge fund offered to pay him a pile of money for advance information about it.
- jgalt212 7y agosounds like they paid to acquire "material non-public information".
- yasp 7y agoThe information that formed the basis of the report was public.
- pg_is_a_butt 7y agoThe information that formed the basis of the report was buried.
- dodobirdlord 7y agoIt sounds like perhaps you aren't familiar with the meaning of "material non-public information". I've found a lot of stuff by Matt Levine on the topic interesting. Ex: https://www.bloomberg.com/opinion/articles/2018-10-15/insider-trading-isn-t-so-simple https://www.bloomberg.com/opinion/articles/2018-10-15/inside...
- prepend 7y agoIt’s only insider trading if the company is improperly using information to trade. 3rd parties can discover and trade on non-public information as long as they aren’t breaking other laws (ie, stealing information, bribing, etc).
- otterley 7y agoThe law is far more complex than you suggest, and I would strongly caution anyone in possession of material non-public information to consult a securities lawyer before proceeding to trade securities based on such information. See, e.g., https://corpgov.law.harvard.edu/2017/01/18/insider-trading-law-after-salman/ https://corpgov.law.harvard.edu/2017/01/18/insider-trading-l...
- alasdair_ 7y ago>I would strongly caution anyone in possession of material non-public information to consult a securities lawyer before proceeding to trade securities based on such information. I would strongly caution anyone in possession of material non-public information to consult a congressman to conduct the trade on their behalf. https://theintercept.com/2015/05/07/congress-argues-cant-investigated-insider-trading/ https://theintercept.com/2015/05/07/congress-argues-cant-inv... (And yes, there have been reforms, but those reforms were later neutered).
- mlyle 7y agoYour source largely agrees with what he said. That is, you must either misappropriate the information or obtain it from a deliberate breach of duty by an insider for the insider's personal benefit. If you e.g. count trucks leaving a company factory and feel you know nonpublic information about the company's finances as a result, feel free to trade based upon this info.
- otterley 7y agoIf you can count trucks leaving a company factory without trespassing (e.g., from a public highway), then it's not "non-public" information. "Non-public" information isn't strictly a function of how widely the information is disseminated. If anyone could obtain the information without trespassing, then it's not "non-public."
- mlyle 7y agoIt's not though. It's information derived from a publicly available source which is not quite the same thing as public information. Often non-public information can be inferred through careful observation, aggregation, and analysis of public information or information that can be seen from a public location. Or you can just see nonpublic information in public. If you're at a restaurant and you see the CEO fighting with the board and then exclaim "I quit!!" --- knowledge that the CEO quit is material nonpublic information to the board. It must be disclosed in a specific way with securities filings. They cannot trade based upon it until there is public disclosure. You, however, can do what you want.