5 ms·

It doesn't matter if you overheard it at a bar or if you're just some HN commenter posting completely incorrect legal advice; the law prohibits trading on mater

It doesn't matter if you overheard it at a bar or if you're just some HN commenter posting completely incorrect legal advice; the law prohibits trading on material nonpublic information. I would pay a lot to see you try your ridiculous legal hokey-pokey on how to define an "insider."

windexh8er 3y ago
Feel free to share some legal precedence where this situation has fared poorly for someone who "overheard it at a bar". It'd also be a good time to watch you lose all that money on your hokey-pokey assumption.
programmarchy 3y ago
If you did hear it in a bar, could you tweet it out before your trade, so the information is made public?
- GTP 3y ago
  I really doubt that you can make yourself something public so that you can later act on it.
- jahewson 3y ago
  If you hear it in a bar it’s already public.
sofixa 3y ago
Had insider trading training, and yes, that's the gist of it. If you know or presume that the information is material (makes a difference) and not public, it's illegal to act on it.
- tripletao 3y ago
  Roughly, it's illegal only if you have some duty not to trade on it. If you acquired the information without misappropriating it (like overhearing it from strangers in a normal public bar), then you're free to trade. https://corpgov.law.harvard.edu/2017/01/18/insider-trading-law-after-salman/ https://corpgov.law.harvard.edu/2017/01/18/insider-trading-l... There's no reason for normal corporate training to discuss that element, because an employee who trades their employer's stock based on MNPI has near-certainly misappropriated it. The question of whether a non-employee has misappropriated information is much more complex, though.
- frognumber 3y ago
  Training is designed to protect the corporation, not to provide accurate lega ladvice. That's true of most corporate trainings, for that matter, be that bribes / corruption, harassment, discrimination, or whatnot. Corporations want employees very far from the line. That's the right way to run them. If you want more nuance, talk to a lawyer or read case law. Generally, insider trading requires something along the lines of a fiduciary duty to keep the information secret, albeit a very weak one. I'm not going to slice that line, but you see references in-thread.
frognumber 3y ago
You're an idiot. https://www.kiplinger.com/article/investing/t052-c008-s001-would-you-be-guilty-of-insider-trading.html https://www.kiplinger.com/article/investing/t052-c008-s001-w... Case #1.
- hnfong 3y ago
  Unless you earn enough money to retain good lawyers and are prepared to get into complicated legal troubles, getting sued isn't a great outcome even if you win. The prudent thing to do is to stay away from anything that might make you become a target of investigation, unless the gains outweigh the risk by a significant margin.
jahewson 3y ago
No, a bar is a public place so this counts as a public disclosure. The people having the conversation would be in trouble with the SEC for making a disclosure in this manner.
kergonath 3y ago
> the law prohibits trading on material nonpublic information. Isn’t it public information the moment it’s said audibly in a public space?
- frognumber 3y ago
  No. It's not. However, as pointed out elsewhere, you can trade on many types of non-public information. Indeed, hedge funds engage in all sorts of surveillance in order to get non-public material information to trade on which gives them a proprietary edge. You just can't trade on insider information. That's a very complex legal line.

windexh8er 3y ago

Feel free to share some legal precedence where this situation has fared poorly for someone who "overheard it at a bar". It'd also be a good time to watch you lose all that money on your hokey-pokey assumption.

programmarchy 3y ago

If you did hear it in a bar, could you tweet it out before your trade, so the information is made public?

GTP 3y ago
I really doubt that you can make yourself something public so that you can later act on it.
jahewson 3y ago
If you hear it in a bar it’s already public.

sofixa 3y ago

Had insider trading training, and yes, that's the gist of it. If you know or presume that the information is material (makes a difference) and not public, it's illegal to act on it.

tripletao 3y ago
Roughly, it's illegal only if you have some duty not to trade on it. If you acquired the information without misappropriating it (like overhearing it from strangers in a normal public bar), then you're free to trade. https://corpgov.law.harvard.edu/2017/01/18/insider-trading-law-after-salman/ https://corpgov.law.harvard.edu/2017/01/18/insider-trading-l... There's no reason for normal corporate training to discuss that element, because an employee who trades their employer's stock based on MNPI has near-certainly misappropriated it. The question of whether a non-employee has misappropriated information is much more complex, though.
frognumber 3y ago
Training is designed to protect the corporation, not to provide accurate lega ladvice. That's true of most corporate trainings, for that matter, be that bribes / corruption, harassment, discrimination, or whatnot. Corporations want employees very far from the line. That's the right way to run them. If you want more nuance, talk to a lawyer or read case law. Generally, insider trading requires something along the lines of a fiduciary duty to keep the information secret, albeit a very weak one. I'm not going to slice that line, but you see references in-thread.

frognumber 3y ago

You're an idiot. https://www.kiplinger.com/article/investing/t052-c008-s001-would-you-be-guilty-of-insider-trading.html https://www.kiplinger.com/article/investing/t052-c008-s001-w... Case #1.

hnfong 3y ago
Unless you earn enough money to retain good lawyers and are prepared to get into complicated legal troubles, getting sued isn't a great outcome even if you win. The prudent thing to do is to stay away from anything that might make you become a target of investigation, unless the gains outweigh the risk by a significant margin.

jahewson 3y ago

No, a bar is a public place so this counts as a public disclosure. The people having the conversation would be in trouble with the SEC for making a disclosure in this manner.

kergonath 3y ago

> the law prohibits trading on material nonpublic information. Isn’t it public information the moment it’s said audibly in a public space?

frognumber 3y ago
No. It's not. However, as pointed out elsewhere, you can trade on many types of non-public information. Indeed, hedge funds engage in all sorts of surveillance in order to get non-public material information to trade on which gives them a proprietary edge. You just can't trade on insider information. That's a very complex legal line.