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>I would argue that: yes, it is immoral. >Is it likely for you to get caught for insider trading? Probably not. Overhearing something in a restaurant and trad

by rosndo 5y ago

>I would argue that: yes, it is immoral. >Is it likely for you to get caught for insider trading? Probably not. Overhearing something in a restaurant and trading on it is not illegal insider trading. For the purposes of this conversation it would be useful for you to have the most basic understanding of what constitutes illegal insider trading.

tharkun__ 5y ago
Maybe I'm misunderstanding what I can find about this online. Please help me understand. Let's say Joe Blow in my example works as a janitor for said company. For the sake of argument, he's directly employed. There is no statutory definition of “insider trading”. As defined by the courts, it refers to purchasing or selling a security while in possession of material, non-public information concerning that security, where the information is obtained from a breach of fiduciary duty, or a duty arising from a relationship of trust or confidence. Obtaining the material information by way of a breach of duty or confidence is the key to an insider trading violation, but after decades of court rulings, it is almost impossible for a court to find that a duty was NOT breached in an insider trading case. Some duties are obvious – the CEO of the company, the CEO’s assistant, and every other employee owe a fiduciary duty to the company and if they use, or disclose, material non-public information, they are liable for insider trading, often even if they didn’t trade themselves. Over the last 10 years, the SEC and the courts have greatly expanded this definition, to include trading by individuals whose “relationship of trust” is so remote as to be non-existent, but that discussion is left for another day https://www.seclaw.com/insider-trading/ https://www.seclaw.com/insider-trading/ Would he not count as "every other employee" in the above for some reason? He overhears a conversation between the CEO of his company and another company about a big deal while he's say fixing the heating in the conference room? Nevermind the likelyhood of that scenario and the really bad practice of discussing such matters in said conference room while he's there (or in a restaurant to go back to the other example but then said janitor would need to frequent the same one as the CEO of his company, which is also an unlikely scenario ;) )

by rosndo 5y ago

tharkun__ 5y ago

Maybe I'm misunderstanding what I can find about this online. Please help me understand. Let's say Joe Blow in my example works as a janitor for said company. For the sake of argument, he's directly employed. There is no statutory definition of “insider trading”. As defined by the courts, it refers to purchasing or selling a security while in possession of material, non-public information concerning that security, where the information is obtained from a breach of fiduciary duty, or a duty arising from a relationship of trust or confidence. Obtaining the material information by way of a breach of duty or confidence is the key to an insider trading violation, but after decades of court rulings, it is almost impossible for a court to find that a duty was NOT breached in an insider trading case. Some duties are obvious – the CEO of the company, the CEO’s assistant, and every other employee owe a fiduciary duty to the company and if they use, or disclose, material non-public information, they are liable for insider trading, often even if they didn’t trade themselves. Over the last 10 years, the SEC and the courts have greatly expanded this definition, to include trading by individuals whose “relationship of trust” is so remote as to be non-existent, but that discussion is left for another day https://www.seclaw.com/insider-trading/ https://www.seclaw.com/insider-trading/ Would he not count as "every other employee" in the above for some reason? He overhears a conversation between the CEO of his company and another company about a big deal while he's say fixing the heating in the conference room? Nevermind the likelyhood of that scenario and the really bad practice of discussing such matters in said conference room while he's there (or in a restaurant to go back to the other example but then said janitor would need to frequent the same one as the CEO of his company, which is also an unlikely scenario ;) )