4 ms·

> Is that considered insider trading? AFAIU, the use of material non-public information always qualifies as insider trading. It does not matter how you got it,

> Is that considered insider trading? AFAIU, the use of material non-public information always qualifies as insider trading. It does not matter how you got it, and it does not even matter if you work at the company. See https://www.investopedia.com/terms/m/materialinsiderinformation.asp https://www.investopedia.com/terms/m/materialinsiderinformat...

piyh 3y ago
Unless you're a congressman
lokar 3y ago
Oh, but it does matter. Insider trading is a kind of theft. A theft from the person or company that had the info and (generally) whose trust you violated. If you develop the info yourself (say, monitoring how full parking lots are at a store to predict earnings), that is fine. Insider trading is about theft of information, not fairness.
- paganel 3y ago
  I wonder what would happen were those stores to say: “hey, those parking lots are ours and such they are private, as a result any information related to them is ours and hence private”?
- riffraff 3y ago
  if you develop it yourself, by definition you are doing it based on public information, so it does not apply.
mason55 3y ago
> It does not matter how you got it Well, it sort of does. In fact, that's almost all that matters. Insider trading is all about obligations. If someone who had the obligation to keep the info secret gave it to you and then you went and traded on it, then yes, you're breaking the law. But if, say, you figure it out by accidentally stumbling on a draft Splunk web page that has a Cisco copyright buried in the code, you don't have any obligation to not trade on that. It's the same information but the only thing that's different is how you got it. The company and its shareholders are the ones who are harmed by insider trading, so if you're entrusted with the info and trade then you're basically breaching your duty to the company (or the chain of people who shared the info with you). But if the company fucks up and leaks the info then you don't have any obligation to not use it.
- wanderingstan 3y ago
  This obligation-centric view is in conflict with my understanding and the above investopedia link: > Material nonpublic information is data relating to a company that has not been made public but could have an impact on its share price. It is against the law for holders of nonpublic material information to use the information to their advantage in trading stocks. Edit: or would a leak on a webpage be considered “public”? I recall a podcast where they said that if you saw a company’s factory blow up while in an airplane, it would be illegal (insider trading) to trade on this information until the news was announced publicly.
  - Invictus0 3y ago
    The webpage leak would be considered public: anyone in the world can load up the page and access the information.
  - mason55 3y ago
    > It is against the law for holders of nonpublic material information to use the information to their advantage in trading stocks. The US and Europe differ on how exactly this should work. In Europe, your view is correct. In the US, it's about obligation. You can trade on material non-public info if you discovered it on your own without doing anything illegal.
    - deleted 3y ago
      [deleted]
  - harambae 3y ago
    > if you saw a company’s factory blow up while in an airplane, it would be illegal (insider trading) to trade on this information until the news was announced publicly How does this square with using satellite analysis to predict a company's retail volume? https://newsroom.haas.berkeley.edu/how-hedge-funds-use-satellite-images-to-beat-wall-street-and-main-street/ https://newsroom.haas.berkeley.edu/how-hedge-funds-use-satel...

piyh 3y ago

Unless you're a congressman

lokar 3y ago

Oh, but it does matter. Insider trading is a kind of theft. A theft from the person or company that had the info and (generally) whose trust you violated. If you develop the info yourself (say, monitoring how full parking lots are at a store to predict earnings), that is fine. Insider trading is about theft of information, not fairness.

paganel 3y ago
I wonder what would happen were those stores to say: “hey, those parking lots are ours and such they are private, as a result any information related to them is ours and hence private”?
riffraff 3y ago
if you develop it yourself, by definition you are doing it based on public information, so it does not apply.

mason55 3y ago

> It does not matter how you got it Well, it sort of does. In fact, that's almost all that matters. Insider trading is all about obligations. If someone who had the obligation to keep the info secret gave it to you and then you went and traded on it, then yes, you're breaking the law. But if, say, you figure it out by accidentally stumbling on a draft Splunk web page that has a Cisco copyright buried in the code, you don't have any obligation to not trade on that. It's the same information but the only thing that's different is how you got it. The company and its shareholders are the ones who are harmed by insider trading, so if you're entrusted with the info and trade then you're basically breaching your duty to the company (or the chain of people who shared the info with you). But if the company fucks up and leaks the info then you don't have any obligation to not use it.

wanderingstan 3y ago
This obligation-centric view is in conflict with my understanding and the above investopedia link: > Material nonpublic information is data relating to a company that has not been made public but could have an impact on its share price. It is against the law for holders of nonpublic material information to use the information to their advantage in trading stocks. Edit: or would a leak on a webpage be considered “public”? I recall a podcast where they said that if you saw a company’s factory blow up while in an airplane, it would be illegal (insider trading) to trade on this information until the news was announced publicly.
- Invictus0 3y ago
  The webpage leak would be considered public: anyone in the world can load up the page and access the information.
- mason55 3y ago
  > It is against the law for holders of nonpublic material information to use the information to their advantage in trading stocks. The US and Europe differ on how exactly this should work. In Europe, your view is correct. In the US, it's about obligation. You can trade on material non-public info if you discovered it on your own without doing anything illegal.
  - deleted 3y ago
    [deleted]
- harambae 3y ago
  > if you saw a company’s factory blow up while in an airplane, it would be illegal (insider trading) to trade on this information until the news was announced publicly How does this square with using satellite analysis to predict a company's retail volume? https://newsroom.haas.berkeley.edu/how-hedge-funds-use-satellite-images-to-beat-wall-street-and-main-street/ https://newsroom.haas.berkeley.edu/how-hedge-funds-use-satel...