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The problem isn't that some customers are given first access, it's that they are given secret first access. If Reuters had made it widely known that the report
by DannoHung 13y ago
The problem isn't that some customers are given first access, it's that they are given secret first access.
If Reuters had made it widely known that the report would be issued to customers in a higher tier first, this wouldn't be a problem. The fact that they were giving it out to certain customers first without telling others that they were going to be getting it later is the material issue. They were, fundamentally, helping create inside information for certain customers and creating an opportunity to exploit other investors who would be unknowingly trading with an information gap.
Even though the report was going to be widely disseminated, getting it ahead of other people without them knowing allows for you to create a huge market advantage for yourself if you know those other people are going to be trading on the same information shortly.
- yummyfajitas 13y agoYes, doing research and gathering information does give you a huge market advantage. That's not the same thing as inside information, which is privileged information given to you by a corporate insider with a fiduciary duty to all shareholders.
- ihsw 13y agoThe difference isn't nearly as cut-and-dry as you think, especially since a variety of regulatory institutions have varying rules between them. Some jurisdictions cast a very wide net so that even associates and family members are included. Since this debacle is approaching world-wide proportion then the impact will be similarly global.
- phyalow 13y agoIt's a grey area - Mosaic theory stipulates that material information gleaned superior analysis of public non material information is itself classifiable as public and non material (ie not inside information)!