7 ms·

if you are in the position of knowing secret data of a publicly traded company, and you are uncomfortable with the position of possibly losing money because you

by syshum 5y ago

if you are in the position of knowing secret data of a publicly traded company, and you are uncomfortable with the position of possibly losing money because you can not act on the secret data, I would suggest you not hold stock for companies you know secret data about No insider trading should not be legal

derekp7 5y ago
Something I was always curious about, but I lack the legal background to find the answer. What if public information showed that you should sell the stock, but you decide to hold it instead (i.e., not do anything at all) because you have insider information that the company will be doing much better than expected? The "not selling" part (assuming you bought stock prior to having insider knowledge) is a form of insider trading, but I can't see how that could be enforced (i.e., how would the SEC be able to prove that you would have sold if you didn't have that positive insider knowledge?)
- smegma2 5y ago
  Not a lawyer but holding should always be fine. No trading is happening therefore it's not insider trading.
  - usrusr 5y ago
    Or more to the point: insider trading isn't quite as victimless as some people might like to believe. The only victim "insider holding" could have would be people betting against a trend caused by public information (who would win even more if the "insider holder" would sell with the herd), either out of pure gambling desire or because their trades are insider trades. Neither seems particularly worthy of protection.
- syshum 5y ago
  not a lawyer, but inaction should never be criminalized.
  - wasmitnetzen 5y ago
    In a lot of Civil law systems, you have a Duty to rescue[1]. Which I wholeheartedly agree with. [1]: https://en.wikipedia.org/wiki/Duty_to_rescue https://en.wikipedia.org/wiki/Duty_to_rescue
    - syshum 5y ago
      - deleted 5y ago
        [deleted]
  - notch656a 5y ago
    Unfortunately it commonly is. One example is mandatory reporters. For some licensed professions, it is a thought crime to merely have the thought that you suspect a child meets some criteria of neglect/abuse, while not performing any action to relay the thought to authorities. This can lead to unwarranted and damaging/traumatic CPS investigations merely so a professional can cover their ass.
    - vkou 5y ago
      This can also lead to highly warranted investigations, given that actual abuse is incredibly common.
      - notch656a 5y ago
        CPS investigators asking non-abused children traumatizing questions (sometimes after being independently detained) and the associated investigation into the family, only reported as CYA to stay in compliance with mandatory reporter laws, is child abuse performed by CPS. CPS themselves are often the child abusers in this fashion, and this law allows them to abuse more children. >This can also lead to highly warranted investigations, given that actual abuse is incredibly common. Or possibly not. It could drive anyone who suspects a professional may attribute (correctly or not) some circumstance as abuse, to merely completely avoid letting their family see any professionals. These laws degrade trust even further between professionals and those seeking them, reducing access to care. Instead of an aid, a therapist or doctor is seen as a threat so dangerous as to risk breaking apart your family at any time. Avoidance at seeking professional services may decrease warranted investigations rather than increase them. Anyone familiar with substance abuse patient care understands how mandatory reporting frequently endangers children: many drug-addicted women birth outside the hospital system so they can keep their children (mandatory reporter laws encourage them to avoid safer birth environment). But of course I don't doubt compelling people to say their thoughts out loud to authorities could lead to more 'warranted investigations' at a dystopic cost. As with many laws written so _someone will think of the children_, there is some factual basis that additional warranted investigations may be opened as a result of creating these thought crimes. I am of the opinion, though, that criminalizing these thoughts leads more towards "involuntarily report anything that may risk my license, at the cost of traumatizing innocent families" rather than "voluntarily report genuine abuse."
- fatnoah 5y ago
  AFAIK, that wouldn't be considered insider trading since there was no trade. However, there's an even more interesting wrinkle. In that case, you plan trades well in advance, and then cancel them based on insider information. In one case, that was rules to not be insider trading either. https://en.wikipedia.org/wiki/SEC_Rule_10b5-1 https://en.wikipedia.org/wiki/SEC_Rule_10b5-1 "After Rule 10b5-1 was enacted, the SEC staff publicly took the position that canceling a planned trade made under the safe harbor does not constitute insider trading, even if the person was aware of the inside information when canceling the trade. The SEC stated that, despite the fact that 10b5-1(c) requires trades to be irrevocable, there can be no liability for insider trading under Rule 10b-5 without an actual securities transaction, based on the U.S. Supreme Court's holding in Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (1975).[6]"
  - metadat 5y ago
    The game is most definitely rigged, it's not even a secret.
notch656a 5y ago
>I would suggest you not hold stock for companies you know secret data about I imagine the way this works out for non-idiot inside traders, is that their cousin or close friend holds the stock instead. Insider trading is really only discoverable when performed by the stupid or complacent.
- syshum 5y ago
  while I agree, the cousin / close friend is pretty stupid as well unless you are making minor moves. That would be easily discovered as well However I agree with the principle that it easy to do if you have any level of intelligence (and no i am not giving way how I would do it ;) ) I dont know the full solution, but it is clear by just looking at US Congress that more work needs to be done on solving insider trading
deleted 5y ago
[deleted]

by syshum 5y ago

derekp7 5y ago

Something I was always curious about, but I lack the legal background to find the answer. What if public information showed that you should sell the stock, but you decide to hold it instead (i.e., not do anything at all) because you have insider information that the company will be doing much better than expected? The "not selling" part (assuming you bought stock prior to having insider knowledge) is a form of insider trading, but I can't see how that could be enforced (i.e., how would the SEC be able to prove that you would have sold if you didn't have that positive insider knowledge?)

smegma2 5y ago
Not a lawyer but holding should always be fine. No trading is happening therefore it's not insider trading.
- usrusr 5y ago
  Or more to the point: insider trading isn't quite as victimless as some people might like to believe. The only victim "insider holding" could have would be people betting against a trend caused by public information (who would win even more if the "insider holder" would sell with the herd), either out of pure gambling desire or because their trades are insider trades. Neither seems particularly worthy of protection.
syshum 5y ago
not a lawyer, but inaction should never be criminalized.
- wasmitnetzen 5y ago
  In a lot of Civil law systems, you have a Duty to rescue[1]. Which I wholeheartedly agree with. [1]: https://en.wikipedia.org/wiki/Duty_to_rescue https://en.wikipedia.org/wiki/Duty_to_rescue
  - syshum 5y ago
    - deleted 5y ago
      [deleted]
- notch656a 5y ago
  Unfortunately it commonly is. One example is mandatory reporters. For some licensed professions, it is a thought crime to merely have the thought that you suspect a child meets some criteria of neglect/abuse, while not performing any action to relay the thought to authorities. This can lead to unwarranted and damaging/traumatic CPS investigations merely so a professional can cover their ass.
  - vkou 5y ago
    This can also lead to highly warranted investigations, given that actual abuse is incredibly common.
    - notch656a 5y ago
      CPS investigators asking non-abused children traumatizing questions (sometimes after being independently detained) and the associated investigation into the family, only reported as CYA to stay in compliance with mandatory reporter laws, is child abuse performed by CPS. CPS themselves are often the child abusers in this fashion, and this law allows them to abuse more children. >This can also lead to highly warranted investigations, given that actual abuse is incredibly common. Or possibly not. It could drive anyone who suspects a professional may attribute (correctly or not) some circumstance as abuse, to merely completely avoid letting their family see any professionals. These laws degrade trust even further between professionals and those seeking them, reducing access to care. Instead of an aid, a therapist or doctor is seen as a threat so dangerous as to risk breaking apart your family at any time. Avoidance at seeking professional services may decrease warranted investigations rather than increase them. Anyone familiar with substance abuse patient care understands how mandatory reporting frequently endangers children: many drug-addicted women birth outside the hospital system so they can keep their children (mandatory reporter laws encourage them to avoid safer birth environment). But of course I don't doubt compelling people to say their thoughts out loud to authorities could lead to more 'warranted investigations' at a dystopic cost. As with many laws written so _someone will think of the children_, there is some factual basis that additional warranted investigations may be opened as a result of creating these thought crimes. I am of the opinion, though, that criminalizing these thoughts leads more towards "involuntarily report anything that may risk my license, at the cost of traumatizing innocent families" rather than "voluntarily report genuine abuse."
fatnoah 5y ago
AFAIK, that wouldn't be considered insider trading since there was no trade. However, there's an even more interesting wrinkle. In that case, you plan trades well in advance, and then cancel them based on insider information. In one case, that was rules to not be insider trading either. https://en.wikipedia.org/wiki/SEC_Rule_10b5-1 https://en.wikipedia.org/wiki/SEC_Rule_10b5-1 "After Rule 10b5-1 was enacted, the SEC staff publicly took the position that canceling a planned trade made under the safe harbor does not constitute insider trading, even if the person was aware of the inside information when canceling the trade. The SEC stated that, despite the fact that 10b5-1(c) requires trades to be irrevocable, there can be no liability for insider trading under Rule 10b-5 without an actual securities transaction, based on the U.S. Supreme Court's holding in Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (1975).[6]"
- metadat 5y ago
  The game is most definitely rigged, it's not even a secret.

notch656a 5y ago

>I would suggest you not hold stock for companies you know secret data about I imagine the way this works out for non-idiot inside traders, is that their cousin or close friend holds the stock instead. Insider trading is really only discoverable when performed by the stupid or complacent.

syshum 5y ago
while I agree, the cousin / close friend is pretty stupid as well unless you are making minor moves. That would be easily discovered as well However I agree with the principle that it easy to do if you have any level of intelligence (and no i am not giving way how I would do it ;) ) I dont know the full solution, but it is clear by just looking at US Congress that more work needs to be done on solving insider trading

deleted 5y ago

[deleted]