4 ms·

It would not surprise me if we come to find out that some people in the know (not Twitter insiders) were stocking up on TWTR shares during the lawsuit drama. Wo

It would not surprise me if we come to find out that some people in the know (not Twitter insiders) were stocking up on TWTR shares during the lawsuit drama. Wonder if SEC has any restrictions on non-insiders with material knowledge.

jimnotgym 4y ago
If you have material knowledge aren't you automatically an insider?
- tptacek 4y ago
  No. You're an insider when you have material knowledge and a duty to the shareholders, implied or otherwise, not to abuse it.
  - manquer 4y ago
    > An “insider” is an officer, director, 10% stockholder and anyone who possesses inside information because of his or her relationship with the Company or with an officer, director or principal stockholder of the Company. Rule 10b-5’s application goes considerably beyond just officers, directors and principal stockholders. [1] > This rule also covers any employee who has obtained material non-public corporate information, as well as any person who has received a “tip” from an Insider of the Company concerning information about the Company that is material and nonpublic, and trades (i.e. purchase or sells) the Company’s stock or other securities" [1] The formal Insider Trading Policy applies to any person who has the information, for the purposes of this law Insider ( as defined in the first part) is materially same. While you are half right that they are not "Insider" the law does not differentiate any person who got the information from the "Insider", so they are still a insider from the SEC regulations PoV and law applies to them if they trade on material non-public information obtained from a "tip". [1]https://www.sec.gov/Archives/edgar/data/1164964/000101968715004168/globalfuture_8k-ex9904.htm https://www.sec.gov/Archives/edgar/data/1164964/000101968715...
    - tptacek 4y ago
      Yes, if you get your information from someone with a duty or relationship to the company, you're also an insider. But if you come by material nonpublic information on your own (for instance, from drone surveillance, or some clever analysis of public IDs in URLs, or whatnot), you are allowed to trade on it; that doesn't make you an insider trader. I'm just correcting the statement made upthread about what constitutes an insider.
      - manquer 4y ago
        > if you come by material nonpublic information on your own Provided you got the information legally. Of the examples you cite: Drone surveillance -> Probably illegal depending on local laws clever analysis of public ID -> Likely legal, although given how CFAA is extremely loose on its interpretation of unlawful access I wouldn't be shocked if a prosecutor successfully argues that it was illegal .
        lazide 4y ago
        Have a cite for that? Pretty sure acquiring it illegally doesn’t make you an insider, and you could still trade on it - albeit be liable for the crime you committed to get the info.
        manquer 4y ago
        It does make it Insider trading. A famous recent example was the hack of press releases before they were released and used to make 100+M profit. [1] . Note the SEC pursued this case not DoJ . SEC has only civil mandate and cannot pursue cases for hacking directly under CFAA which would be a criminal offense only the DoJ can and perhaps also did concurrently [1] https://www.sec.gov/news/pressrelease/2015-163.html https://www.sec.gov/news/pressrelease/2015-163.html
        lazide 4y ago
        I can't find the actual complaint, but the wire there seems to say they are charging them under antifraud rules, not insider trading rules. "The SEC’s complaint charges each of the 32 defendants with violating federal antifraud laws and related SEC antifraud rules and seeks a final judgment ordering the defendants to pay penalties, return their allegedly ill-gotten gains with prejudgment interest, and be subject to permanent injunctions from future violations of the antifraud laws." It's a bit confusing though, because earlier in the same article they seem to imply it's for insider trading. But they don't seem to actually say that's what they are being charged with.
- tmaly 4y ago
flatirony 4y ago
I think Hindenburg Research, normally an activist short seller, published a report that they were loading up long on Twitter shares b/c they were confident Musk would lose.

jimnotgym 4y ago

If you have material knowledge aren't you automatically an insider?

tptacek 4y ago
No. You're an insider when you have material knowledge and a duty to the shareholders, implied or otherwise, not to abuse it.
- manquer 4y ago
  > An “insider” is an officer, director, 10% stockholder and anyone who possesses inside information because of his or her relationship with the Company or with an officer, director or principal stockholder of the Company. Rule 10b-5’s application goes considerably beyond just officers, directors and principal stockholders. [1] > This rule also covers any employee who has obtained material non-public corporate information, as well as any person who has received a “tip” from an Insider of the Company concerning information about the Company that is material and nonpublic, and trades (i.e. purchase or sells) the Company’s stock or other securities" [1] The formal Insider Trading Policy applies to any person who has the information, for the purposes of this law Insider ( as defined in the first part) is materially same. While you are half right that they are not "Insider" the law does not differentiate any person who got the information from the "Insider", so they are still a insider from the SEC regulations PoV and law applies to them if they trade on material non-public information obtained from a "tip". [1]https://www.sec.gov/Archives/edgar/data/1164964/000101968715004168/globalfuture_8k-ex9904.htm https://www.sec.gov/Archives/edgar/data/1164964/000101968715...
  - tptacek 4y ago
    Yes, if you get your information from someone with a duty or relationship to the company, you're also an insider. But if you come by material nonpublic information on your own (for instance, from drone surveillance, or some clever analysis of public IDs in URLs, or whatnot), you are allowed to trade on it; that doesn't make you an insider trader. I'm just correcting the statement made upthread about what constitutes an insider.
    - manquer 4y ago
      > if you come by material nonpublic information on your own Provided you got the information legally. Of the examples you cite: Drone surveillance -> Probably illegal depending on local laws clever analysis of public ID -> Likely legal, although given how CFAA is extremely loose on its interpretation of unlawful access I wouldn't be shocked if a prosecutor successfully argues that it was illegal .
      - lazide 4y ago
        Have a cite for that? Pretty sure acquiring it illegally doesn’t make you an insider, and you could still trade on it - albeit be liable for the crime you committed to get the info.
        manquer 4y ago
        It does make it Insider trading. A famous recent example was the hack of press releases before they were released and used to make 100+M profit. [1] . Note the SEC pursued this case not DoJ . SEC has only civil mandate and cannot pursue cases for hacking directly under CFAA which would be a criminal offense only the DoJ can and perhaps also did concurrently [1] https://www.sec.gov/news/pressrelease/2015-163.html https://www.sec.gov/news/pressrelease/2015-163.html
        lazide 4y ago
        I can't find the actual complaint, but the wire there seems to say they are charging them under antifraud rules, not insider trading rules. "The SEC’s complaint charges each of the 32 defendants with violating federal antifraud laws and related SEC antifraud rules and seeks a final judgment ordering the defendants to pay penalties, return their allegedly ill-gotten gains with prejudgment interest, and be subject to permanent injunctions from future violations of the antifraud laws." It's a bit confusing though, because earlier in the same article they seem to imply it's for insider trading. But they don't seem to actually say that's what they are being charged with.
tmaly 4y ago

flatirony 4y ago

I think Hindenburg Research, normally an activist short seller, published a report that they were loading up long on Twitter shares b/c they were confident Musk would lose.