5 ms·

You're not supposed to do that at all. You could argue you didn't possess any material non-public information, but since essentially every internal document you

by ethbr0 5y ago

You're not supposed to do that at all. You could argue you didn't possess any material non-public information, but since essentially every internal document you access is non-public information, that's probably not an argument you want to deal with. Just trade your own company's shares in the windows after earnings releases. Or set up a pre-defined share sale plan in one of these windows, covering the future, and don't touch it.

mgfist 5y ago
Many companies, and (most?) tech companies have trading black out periods that are lifted for about a month a few days after earnings. It applies to your personal brokerage account too, even though they can't technically enforce it.
- jdmichal 5y ago
  I worked at a bank. They 100% had access to my personal brokerage accounts. It was a condition of employment.
  - labcomputer 5y ago
    Yes, banks do that. Many even prohibit employees to have personal brokerage accounts at other banks (How does that work for a married couple that work for different banks? There are exceptions which require additional disclosures, like submitting you spouse's and/or minor child's monthly statements within some short time frame). Banks are the exception. Very, very few not-a-bank companies do that.
sidewndr46 5y ago
> Or set up a pre-defined share sale plan in one of these windows, covering the future, and don't touch it. The insider trading training I did at one company specifically mentioned this is against SEC rules and is insider trading. I am unsure if that is actually true, but that is what the company expected us to operate as.
- tempsy 5y ago
  i follow the market pretty closely and executives and board members often have pre-defined sales plans that will sell shares right before earnings. not sure if it’s open to employees. personally don’t think it’s fair but it seems to be legal as is.
- toast0 5y ago
  Setting up a 10b5-1 plan with your broker when you don't have material, non-public information, and your broker follows the plan is the way to trade in employer stock with a solid footing if you regularly have material non-public information. (Such as, in this case, a major change in business metrics). Your company may not permit regular employees to setup a 10b5-1 plan, I think they need signof by corporate legal; and in that case, any trading that happens in your account could be considered insider trading based on your knowledge when the trade executes (or possibly when it's entered/while it's open... details are sort of fuzzy), regardless of if you or your agent made the trade, or even if the trade was automatic due to margin or something.
  - ethbr0 5y ago
    IANAL, but a 10b5-1 plan (thanks for reminding me of the naming!) is an affirmative defense, that removes insider trading liability if a trade satisfies all of its conditions. Effectively, (1) the plan is created when one does not have material nonpublic information, (2) that it... "- Specified the amount of securities to be purchased or sold, price, and date; - Provided a written formula or algorithm, or computer program, for determining amounts, prices, and dates; or - Did not permit the person to exercise any subsequent influence over how, when, or whether to effect purchases or sales; provided, in addition, that any other person who exercised such influence was not aware of the material nonpublic information when doing so." [0] ... and (3) that the trade as executed did not attempt to subvert (2). So it's not really something you need to have your corporate legal agree to for it to be valid (although legal may require or encourage you to do so, to limit exposure of company officers botching it). You simply have to set up a plan that satisfies the test with your broker, then claim it as your defense if the SEC comes after you. A note on a napkin saying "Sell 5,000 shares 3 days before every earnings call, as long as the RSI is >50" would seem to suffice, provided you didn't subsequently meddle. [0] https://www.federalregister.gov/documents/2022/02/15/2022-01140/rule-10b5-1-and-insider-trading https://www.federalregister.gov/documents/2022/02/15/2022-01...

by ethbr0 5y ago

mgfist 5y ago

Many companies, and (most?) tech companies have trading black out periods that are lifted for about a month a few days after earnings. It applies to your personal brokerage account too, even though they can't technically enforce it.

jdmichal 5y ago
I worked at a bank. They 100% had access to my personal brokerage accounts. It was a condition of employment.
- labcomputer 5y ago
  Yes, banks do that. Many even prohibit employees to have personal brokerage accounts at other banks (How does that work for a married couple that work for different banks? There are exceptions which require additional disclosures, like submitting you spouse's and/or minor child's monthly statements within some short time frame). Banks are the exception. Very, very few not-a-bank companies do that.

sidewndr46 5y ago

> Or set up a pre-defined share sale plan in one of these windows, covering the future, and don't touch it. The insider trading training I did at one company specifically mentioned this is against SEC rules and is insider trading. I am unsure if that is actually true, but that is what the company expected us to operate as.

tempsy 5y ago
i follow the market pretty closely and executives and board members often have pre-defined sales plans that will sell shares right before earnings. not sure if it’s open to employees. personally don’t think it’s fair but it seems to be legal as is.
toast0 5y ago
Setting up a 10b5-1 plan with your broker when you don't have material, non-public information, and your broker follows the plan is the way to trade in employer stock with a solid footing if you regularly have material non-public information. (Such as, in this case, a major change in business metrics). Your company may not permit regular employees to setup a 10b5-1 plan, I think they need signof by corporate legal; and in that case, any trading that happens in your account could be considered insider trading based on your knowledge when the trade executes (or possibly when it's entered/while it's open... details are sort of fuzzy), regardless of if you or your agent made the trade, or even if the trade was automatic due to margin or something.
- ethbr0 5y ago
  IANAL, but a 10b5-1 plan (thanks for reminding me of the naming!) is an affirmative defense, that removes insider trading liability if a trade satisfies all of its conditions. Effectively, (1) the plan is created when one does not have material nonpublic information, (2) that it... "- Specified the amount of securities to be purchased or sold, price, and date; - Provided a written formula or algorithm, or computer program, for determining amounts, prices, and dates; or - Did not permit the person to exercise any subsequent influence over how, when, or whether to effect purchases or sales; provided, in addition, that any other person who exercised such influence was not aware of the material nonpublic information when doing so." [0] ... and (3) that the trade as executed did not attempt to subvert (2). So it's not really something you need to have your corporate legal agree to for it to be valid (although legal may require or encourage you to do so, to limit exposure of company officers botching it). You simply have to set up a plan that satisfies the test with your broker, then claim it as your defense if the SEC comes after you. A note on a napkin saying "Sell 5,000 shares 3 days before every earnings call, as long as the RSI is >50" would seem to suffice, provided you didn't subsequently meddle. [0] https://www.federalregister.gov/documents/2022/02/15/2022-01140/rule-10b5-1-and-insider-trading https://www.federalregister.gov/documents/2022/02/15/2022-01...