5 ms·

The only true thing in this comment is "you are not a lawyer". Acting on information that is not public knowledge for your benefit is insider trading, regardle

The only true thing in this comment is "you are not a lawyer". Acting on information that is not public knowledge for your benefit is insider trading, regardless of where/how you received the information, and would be a violation. Acting faster than everyone else on public information is not; this is essentially what day traders are trying to do. >> we're getting a big government grant tomorrow" and there was some expectation you could keep a secret, If you buy stock on a public market based on this information, you're not really keeping a secret, are you?

dmurray 6y ago
> Acting on information that is not public knowledge for your benefit is insider trading, regardless of where/how you received the information This just isn't correct. In the US, you need to have a "relationship of trust or confidence" with the company in order to be insider trading. Don't take my word for it, here's the SEC [0]: > Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, on the basis of material, nonpublic information about the security. And here's the case law [1]: > a tippee cannot be held liable unless the Government proves that the tippee knew both (i) that the initial tipper breached a fiduciary duty in disclosing material nonpublic information in exchange for a personal benefit and (ii) that the tipper had received a personal benefit for divulging the information. > If you buy stock on a public market based on this information, you're not really keeping a secret, are you? No, and you're insider trading. But if you could reasonably have been expected to keep the secret, the leaker is off the hook. I'll let you look up the precedent for that yourself. Like I said, I'm not a lawyer, and not pretending to be one, but I do know a thing or two about this area. If you are a lawyer, consider asking your law school for a refund. [0] https://www.investor.gov/introduction-investing/investing-basics/glossary/insider-trading https://www.investor.gov/introduction-investing/investing-ba... [1] https://www.proskauer.com/alert/second-circuit-clarifies-elements-of-tippee-liability-for-insider-trading https://www.proskauer.com/alert/second-circuit-clarifies-ele...

dmurray 6y ago

> Acting on information that is not public knowledge for your benefit is insider trading, regardless of where/how you received the information This just isn't correct. In the US, you need to have a "relationship of trust or confidence" with the company in order to be insider trading. Don't take my word for it, here's the SEC [0]: > Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, on the basis of material, nonpublic information about the security. And here's the case law [1]: > a tippee cannot be held liable unless the Government proves that the tippee knew both (i) that the initial tipper breached a fiduciary duty in disclosing material nonpublic information in exchange for a personal benefit and (ii) that the tipper had received a personal benefit for divulging the information. > If you buy stock on a public market based on this information, you're not really keeping a secret, are you? No, and you're insider trading. But if you could reasonably have been expected to keep the secret, the leaker is off the hook. I'll let you look up the precedent for that yourself. Like I said, I'm not a lawyer, and not pretending to be one, but I do know a thing or two about this area. If you are a lawyer, consider asking your law school for a refund. [0] https://www.investor.gov/introduction-investing/investing-basics/glossary/insider-trading https://www.investor.gov/introduction-investing/investing-ba... [1] https://www.proskauer.com/alert/second-circuit-clarifies-elements-of-tippee-liability-for-insider-trading https://www.proskauer.com/alert/second-circuit-clarifies-ele...