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Legally speaking then, it's best to never make trades on any company that you currently or have previously (because you could still have friends that work there

Legally speaking then, it's best to never make trades on any company that you currently or have previously (because you could still have friends that work there) worked for?

WJW 3y ago
If you are in the USA, rule 10b5-1 of the SEC [1] "allows insiders of publicly-traded corporations to set up a trading plan for selling stocks they own". Despite the description in the link, as I understand it you can also buy more stock as long as you announce it well in advance. It is explicitly meant to allow people who cannot avoid having non-public information about a stock to still trade in that stock. By forcing them to publicly announce well in advance what they intend to trade and when, the idea is that they then cannot do the short term high risk trading that you need to really profit from insider trading. https://www.investopedia.com/terms/r/rule-10b5-1.asp https://www.investopedia.com/terms/r/rule-10b5-1.asp
IKantRead 3y ago
Have you never worked for a publicly traded company where part of your compensation is in RSUs? You are only able to trade share's during specific windows of time typically 1 week after earnings are released. Additionally virtually every company I've known has explicit policies stating that you cannot buy/sell any derivatives related to the company stock (which is a shame since buying put options is a legitimate way to insure your compensation). Further more, even these rules are only this lax for non-executive or other high level employees. If you're higher up in the company you have much more access to non-public material information. The solution to this is usually to set up a 10b5-1 that automatically liquidates shares based on a schedule approved by the board. In regards to the "previously" question. I wouldn't worry about legitimate trades, but if you are trading based on insider information and looking to gain a lot of money, then trading would, by definition, be "insider trading"
- alasdair_ 3y ago
  >You are only able to trade share's during specific windows of time typically 1 week after earnings are released. As a practical matter, you can set up a 10b5-1 to get around this restriction if all you want to do is regularly sell your RSUs when you get them or at certain fixed periods.
- outworlder 3y ago
  > You are only able to trade share's during specific windows of time typically 1 week after earnings are released. Just having RSUs doesn't mean that you are trade restricted. That depends on your job function and you can confirm with HR (I had to). In addition, like you say, there are further restrictions if you are sufficiently high up. Yeah, some companies have restrictions on derivatives, most have restrictions on shorting.

Legally speaking then, it's best to never make trades on any company that you currently or have previously (because you could still have friends that work there) worked for?

WJW 3y ago

If you are in the USA, rule 10b5-1 of the SEC [1] "allows insiders of publicly-traded corporations to set up a trading plan for selling stocks they own". Despite the description in the link, as I understand it you can also buy more stock as long as you announce it well in advance. It is explicitly meant to allow people who cannot avoid having non-public information about a stock to still trade in that stock. By forcing them to publicly announce well in advance what they intend to trade and when, the idea is that they then cannot do the short term high risk trading that you need to really profit from insider trading. https://www.investopedia.com/terms/r/rule-10b5-1.asp https://www.investopedia.com/terms/r/rule-10b5-1.asp

IKantRead 3y ago

Have you never worked for a publicly traded company where part of your compensation is in RSUs? You are only able to trade share's during specific windows of time typically 1 week after earnings are released. Additionally virtually every company I've known has explicit policies stating that you cannot buy/sell any derivatives related to the company stock (which is a shame since buying put options is a legitimate way to insure your compensation). Further more, even these rules are only this lax for non-executive or other high level employees. If you're higher up in the company you have much more access to non-public material information. The solution to this is usually to set up a 10b5-1 that automatically liquidates shares based on a schedule approved by the board. In regards to the "previously" question. I wouldn't worry about legitimate trades, but if you are trading based on insider information and looking to gain a lot of money, then trading would, by definition, be "insider trading"

alasdair_ 3y ago
>You are only able to trade share's during specific windows of time typically 1 week after earnings are released. As a practical matter, you can set up a 10b5-1 to get around this restriction if all you want to do is regularly sell your RSUs when you get them or at certain fixed periods.
outworlder 3y ago
> You are only able to trade share's during specific windows of time typically 1 week after earnings are released. Just having RSUs doesn't mean that you are trade restricted. That depends on your job function and you can confirm with HR (I had to). In addition, like you say, there are further restrictions if you are sufficiently high up. Yeah, some companies have restrictions on derivatives, most have restrictions on shorting.