4 ms·

Perhaps, I am a bit naive, but what qualifies as insider trading? If I work at a company, I am bound to know things that are not public knowledge. This means t

by _RPL5_ 5y ago

Perhaps, I am a bit naive, but what qualifies as insider trading? If I work at a company, I am bound to know things that are not public knowledge. This means that any trade I make is technically insider trading. Example: I am an engineer, working on a new unannounced product which I think will do well. I buy shares of my company in advance of the release of that product. A few years later, after the product has shipped and delivered the expected gains, I sell my stock. Will I go to jail for insider trading?

izgzhen 5y ago
Typically publicly traded companies have trading window limitations for its employees, and one purpose is to avoid insider trading risks. But that works for “normal engineer”. Executives who have more privileged info might need to consult their lawyers case by case.
- ehsankia 5y ago
  One common approach also it to have auto-sell, which will automatically sell your stock on a schedule which is set long in advance, so there's no suspicion of insider trading. Honestly I think that should be the only way to sell stocks of your own company, either that or schedule a sale at least a quarter in advance.
TrackerFF 5y ago
https://www.law.cornell.edu/wex/insider_trading https://www.law.cornell.edu/wex/insider_trading
ec109685 5y ago
Good question. Same thing applies if you decide not to sell your company’s stock because you have confidence in the internal roadmap. However, at most companies, there’s a segment of data that is kept more confidential, and those people with access have more guardrails on their trading. Netflix is an exception in that most of their workforce is “insider” and thus financial data such as what was shared within this indictment is more freely available.
MAGZine 5y ago
https://www.google.com/search?q=material+non+public+information https://www.google.com/search?q=material+non+public+informat... You can't trade on specific information, but you can definitely trade on sentiment, which is what the rest of the market trades on.
Hamuko 5y ago
I remember insider trading being roughly defined as "trading on non-public information which can be considered to be relevant to the share price" during our company training. At least in our company, most of the non-public information that the engineers have isn't really going to rock the stock price, since it's usually just feature additions to existing products. I imagine it'd be quite a lot different if you were working at for example Apple and knew that they were going to release a whole new product (and not just the iPhone X+1). My biggest giveaway from the company training was to just avoid the company stock. Life is much easier that way.
- DavidPeiffer 5y ago
  >My biggest giveaway from the company training was to just avoid the company stock. Life is much easier that way. That has always been my approach, but I also have never worked for a company that routinely gives stock to employees. Having a tilt in your investment portfolio towards your employer is a big risk concentrator (company goes downhill, you might get laid off at the same time), not to mention the potential issues with insider trading or the appearance of insider trading.

by _RPL5_ 5y ago

izgzhen 5y ago

Typically publicly traded companies have trading window limitations for its employees, and one purpose is to avoid insider trading risks. But that works for “normal engineer”. Executives who have more privileged info might need to consult their lawyers case by case.

ehsankia 5y ago
One common approach also it to have auto-sell, which will automatically sell your stock on a schedule which is set long in advance, so there's no suspicion of insider trading. Honestly I think that should be the only way to sell stocks of your own company, either that or schedule a sale at least a quarter in advance.

TrackerFF 5y ago

https://www.law.cornell.edu/wex/insider_trading https://www.law.cornell.edu/wex/insider_trading

ec109685 5y ago

Good question. Same thing applies if you decide not to sell your company’s stock because you have confidence in the internal roadmap. However, at most companies, there’s a segment of data that is kept more confidential, and those people with access have more guardrails on their trading. Netflix is an exception in that most of their workforce is “insider” and thus financial data such as what was shared within this indictment is more freely available.

MAGZine 5y ago

https://www.google.com/search?q=material+non+public+information https://www.google.com/search?q=material+non+public+informat... You can't trade on specific information, but you can definitely trade on sentiment, which is what the rest of the market trades on.

Hamuko 5y ago

I remember insider trading being roughly defined as "trading on non-public information which can be considered to be relevant to the share price" during our company training. At least in our company, most of the non-public information that the engineers have isn't really going to rock the stock price, since it's usually just feature additions to existing products. I imagine it'd be quite a lot different if you were working at for example Apple and knew that they were going to release a whole new product (and not just the iPhone X+1). My biggest giveaway from the company training was to just avoid the company stock. Life is much easier that way.

DavidPeiffer 5y ago
>My biggest giveaway from the company training was to just avoid the company stock. Life is much easier that way. That has always been my approach, but I also have never worked for a company that routinely gives stock to employees. Having a tilt in your investment portfolio towards your employer is a big risk concentrator (company goes downhill, you might get laid off at the same time), not to mention the potential issues with insider trading or the appearance of insider trading.