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Even if hedging the risk directly is banned, you may be able to create a reasonable approximation by hedging shares of a near competitor. Apparently people in f
by njs12345 11y ago
Even if hedging the risk directly is banned, you may be able to create a reasonable approximation by hedging shares of a near competitor. Apparently people in finance who get paid partly in options do this kind of thing all the time.
Also, how would you ever get caught if you just ignored what it said in the handbook?
- fredkbloggs 11y ago> Also, how would you ever get caught if you just ignored what it said in the handbook? At this point, I assume that everything you do is known to everyone. It's unfortunate, but it's also the sensible assumption. Even if the law would seem to prevent them from discovering your actions, there's no reason to believe that law will actually protect you. At the very least, they can almost always fire you without any reason at all, so even the slightest suspicion is sufficient. They don't need to prove it in criminal court.
- foobarqux 11y agoYou are also usually banned from trading in the stock of competitors.
- yummyfajitas 11y agoSo I've never actually seen one of these agreements, but supposing your stock is in an index, is it also forbidden to go short the index and long in stocks outside your sector? (I expect transaction costs would nuke this idea, but I'm somewhat curious how sophisticated big company employee agreements are.)
- sokoloff 11y agoThat's not covered by my current company's policy (and I don't recall seeing it in any of the other ones), but if you entered into such an arrangement, it would be plainly obvious what your intent was, and the fact that you didn't technically violate the company's agreement wouldn't be an excuse for the company's compliance department nor for the SEC. Short the index and long everything but your SECTOR is probably OK. That's just a bet against your sector. Short the index and long everything except your specific COMPANY is not going to be defensible. (In my policies, it's more straightforward to just short the sector directly, if such an instrument exists.)
- encoderer 11y agoThe SEC is not going to care that you traded in your competitors stock unless you had inside information.
- sokoloff 11y agoSource? I've worked in finance and for several publicly traded companies and have never been barred from trading stock in our competitors (other than if they were a takeover target or potential acquirer in active talks with us and that I knew about that, which is vanishingly rare).
- foobarqux 11y agoAmong my own employment agreements, but I won't name the companies or industries.
- fredkbloggs 11y agoI've never seen that. If you have, was there some list? It can be pretty hard to even define competitors, especially if your own businesses are far-reaching or fluid. I mean, if you work for GE, does that just mean you can't own stocks? Or a company like Google whose actual business is narrow but whose ambitions are unbounded? That would be pretty hard to defend.
- foobarqux 11y agoI have had competitors explicitly listed in employment agreements with catch-alls ("this is not an exhaustive list") with respect to non-competes. Indexing is fine.
- NeutronBoy 11y ago> I mean, if you work for GE, does that just mean you can't own stocks You're allowed to own stocks in this example, but you generally wouldn't be allowed to trade on them.
- fapjacks 11y agoMy best friend worked for a company that forbade investing in competitors, but I'm not sure if there was a list.