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>illicitly obtained No such stipulation. I'm not allowed to trade my company's stock based on information I acquire through performing my standard everyday job

by pb7 6y ago

>illicitly obtained No such stipulation. I'm not allowed to trade my company's stock based on information I acquire through performing my standard everyday job duties.

derivativethrow 6y ago
That is because the actual stipulation is for there to be a confidentiality or fiduciary agreement. As shorthand, "illicitly obtained" could therefore be replaced with, "illicitly appropriated." On its own, material and nonpublic information is fine to trade with. Likewise not all insider trading is illegal; most of it is explicitly legal and mundane.
perl4ever 6y ago
You can't defend against insider trading accusations by saying "I had insider knowledge but I didn't base my trades on it". Therefore your statement implies that you can't trade your company's stock at all. However, it is an empirical fact that companies sometimes offer it as an option in the 401k plan, which seems like an endorsement that it's ok in some situation. Nonpublic information about, say, a merger, would be "illicit" in my understanding. But what if you have worked for a company for 10 years and you think management is really great? You can be guilty of insider trading for not buying something that you'd otherwise have done, too. So if you worked for a company and found it a terrible place to work and therefore never bought company stock, or sold the stock you had, you would in fact have profited from material nonpublic knowledge. Obviously that can't generally be a crime.
- yibg 6y ago
  Of the public companies I've worked at, all had insider trading policies and it was stressed repeatedly there will be legal repercussions. You are allowed to trade yes, but only during open trading windows, typically following an earnings report.
  - perl4ever 6y ago
    I think most public companies make sure that upcoming earnings data and such is only released to people on a "need to know" basis. It doesn't seem reasonable that thousands of employees would have access to it.
    - yibg 6y ago
      Plenty of data is shared internally with rank and file. Netflix for example openly shares (internally) subscriber numbers, which is a critical piece looked at during the earnings report.
- pb7 6y ago
  > But what if you have worked for a company for 10 years and you think management is really great? This is exactly why they say material non-public information. This is not material. It is your opinion, and you can trade on it during applicable trading windows. My public company has trading blackout windows close to earnings reports forbidding everyone from trading, non-public information or not. Outside those, you’re still not allowed to trade if you are in possession of material non-public information. If you are an executive, that basically means all the time which is why they’re required to file scheduled sales long in advance. It doesn’t matter if you “do not use it” for your trades — that’s not going to hold up with the SEC. > You can be guilty of insider trading for not buying something that you'd otherwise have done, too. This doesn’t sound legitimate.

by pb7 6y ago

>illicitly obtained No such stipulation. I'm not allowed to trade my company's stock based on information I acquire through performing my standard everyday job duties.

derivativethrow 6y ago

That is because the actual stipulation is for there to be a confidentiality or fiduciary agreement. As shorthand, "illicitly obtained" could therefore be replaced with, "illicitly appropriated." On its own, material and nonpublic information is fine to trade with. Likewise not all insider trading is illegal; most of it is explicitly legal and mundane.

perl4ever 6y ago

You can't defend against insider trading accusations by saying "I had insider knowledge but I didn't base my trades on it". Therefore your statement implies that you can't trade your company's stock at all. However, it is an empirical fact that companies sometimes offer it as an option in the 401k plan, which seems like an endorsement that it's ok in some situation. Nonpublic information about, say, a merger, would be "illicit" in my understanding. But what if you have worked for a company for 10 years and you think management is really great? You can be guilty of insider trading for not buying something that you'd otherwise have done, too. So if you worked for a company and found it a terrible place to work and therefore never bought company stock, or sold the stock you had, you would in fact have profited from material nonpublic knowledge. Obviously that can't generally be a crime.

yibg 6y ago
Of the public companies I've worked at, all had insider trading policies and it was stressed repeatedly there will be legal repercussions. You are allowed to trade yes, but only during open trading windows, typically following an earnings report.
- perl4ever 6y ago
  I think most public companies make sure that upcoming earnings data and such is only released to people on a "need to know" basis. It doesn't seem reasonable that thousands of employees would have access to it.
  - yibg 6y ago
    Plenty of data is shared internally with rank and file. Netflix for example openly shares (internally) subscriber numbers, which is a critical piece looked at during the earnings report.
pb7 6y ago
> But what if you have worked for a company for 10 years and you think management is really great? This is exactly why they say material non-public information. This is not material. It is your opinion, and you can trade on it during applicable trading windows. My public company has trading blackout windows close to earnings reports forbidding everyone from trading, non-public information or not. Outside those, you’re still not allowed to trade if you are in possession of material non-public information. If you are an executive, that basically means all the time which is why they’re required to file scheduled sales long in advance. It doesn’t matter if you “do not use it” for your trades — that’s not going to hold up with the SEC. > You can be guilty of insider trading for not buying something that you'd otherwise have done, too. This doesn’t sound legitimate.