4 ms·

I have an ignorant question about insider trading. Say I'm a company thinking about making a giant, billion dollar purchase. I will probably buy from one of a f

I have an ignorant question about insider trading. Say I'm a company thinking about making a giant, billion dollar purchase. I will probably buy from one of a few companies. Can I legally buy a bunch of stock in one of those companies, then arrange a giant purchase, then announce it, and then sell the stock? Can I have insider knowledge about a company that the company in question doesn't itself know yet?

estearum 1y ago
No that's not allowed > Can I have insider knowledge about a company that the company in question doesn't itself know yet? Yes you can It's useful to think of this not as "insider knowledge" but the actual term: material non-public information. Is the information you have material (i.e. will move the stock price)? Is it non-public? Then there you go: it would be ill-advised to trade on it.
- deleted 1y ago
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- CobrastanJorji 1y ago
  So, if it's not okay for me to buy their stock, is it okay to make them giving me a bunch of their stock part of the deal? Like "I will buy a billion dollars worth of your merchandise for $1.5 billion, and you will give me the merchandise plus $500 million of your stock?"
  - dkrich 1y ago
    Yes because in that case you’re acquiring the stock directly from the company as part of a planned transaction. In one case you’d be dealing with individual uninformed shareholders which would cause a lack of confidence in markets (the entire reason insider trading rules were created), in the other you aren’t.
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nemothekid 1y ago
You would get in trouble for trading on information about the company you own. Buying a bunch of stock in companies you think your company might acquire is insider trading against the company that you own.
citizenpaul 1y ago
>Can I have insider knowledge about a company that the company in question doesn't itself know yet? Yes. However you can get around it by simply back filing a disclosure (whoops im sorry)after the fact since everyone in congress does it and it has literally never been legally pursued and never will be. I'm not being sarcastic something like 80% of congress disclosures are 2 years late or more. I don't remember the exact numbers but its insane. Just another spin on too big to fail, they can't arrest us because they would have to arrest all of congress and collapse the country.
SoftTalker 1y ago
Trading on non-public information is prohibited. Doesn't matter if you are or are not actually an "insider" in the company whose stock you are trading.

estearum 1y ago

No that's not allowed > Can I have insider knowledge about a company that the company in question doesn't itself know yet? Yes you can It's useful to think of this not as "insider knowledge" but the actual term: material non-public information. Is the information you have material (i.e. will move the stock price)? Is it non-public? Then there you go: it would be ill-advised to trade on it.

deleted 1y ago
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CobrastanJorji 1y ago
So, if it's not okay for me to buy their stock, is it okay to make them giving me a bunch of their stock part of the deal? Like "I will buy a billion dollars worth of your merchandise for $1.5 billion, and you will give me the merchandise plus $500 million of your stock?"
- dkrich 1y ago
  Yes because in that case you’re acquiring the stock directly from the company as part of a planned transaction. In one case you’d be dealing with individual uninformed shareholders which would cause a lack of confidence in markets (the entire reason insider trading rules were created), in the other you aren’t.
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nemothekid 1y ago

You would get in trouble for trading on information about the company you own. Buying a bunch of stock in companies you think your company might acquire is insider trading against the company that you own.

citizenpaul 1y ago

>Can I have insider knowledge about a company that the company in question doesn't itself know yet? Yes. However you can get around it by simply back filing a disclosure (whoops im sorry)after the fact since everyone in congress does it and it has literally never been legally pursued and never will be. I'm not being sarcastic something like 80% of congress disclosures are 2 years late or more. I don't remember the exact numbers but its insane. Just another spin on too big to fail, they can't arrest us because they would have to arrest all of congress and collapse the country.

SoftTalker 1y ago

Trading on non-public information is prohibited. Doesn't matter if you are or are not actually an "insider" in the company whose stock you are trading.