Can some law nerd tell me the difference between “insider trading” and just like, “hearing shit”? Like if I get drunk with some stock bro in he mentions that his company is buying another company or some shit is me going home and changing my investment portfolio “insider trading”? What demarcates info that’s just general public knowledge and secret shit that you shouldn’t be telling people about?
Basically if you have a privileged role and having that role is the source of your information.
So if you’re the company accountant and you know the company is about to miss a loan repayment well you only know that because you’re an accountant for the company, an insider, so you cannot act on that information. Likewise people on the board know the financials and will know that, eg that new merger just fell through so you know the bad news days or even weeks before the market. You only have this knowledge because you’re an insider.
But let’s say you live near the Tesla factory and you notice, just because you’re observant, that the number of trucks flowing to and from the factory have greatly diminished and you think to yourself “well that’s not good for Tesla” then you’re not an insider you’re just an observant person and can act on that.
Note that congress explicitly give themselves an exception and are completely legally allowed to trade on the enormous volume of insider information they have. It doesn’t matter if it’s top secret or a bill you’re about to vote on or whatever they are allowed to do it which is how a lot of them are rich.
So what’s the line between when info becomes public knowledge and when it’s something secret that trading on it is still “insider”? Like does it have to be reported to some agency first? Like if there was info that was kinda public but most people didn’t pay attention to it or knew how to interpret it correctly, but I did because of my position as an insider, would that still be insider trading?
Ideally it’s announced by the company in some formal way. Commonly there will be a quarterly update which includes important information which will affect the share price. It can also be that it leaks out and becomes sufficiently widely known that it’s considered to have become public, but the threshold isn’t clearly defined and you need a judge to work it out.
Basically once a member of the public reasonably could be aware of it then it’s public knowledge.
There is no such thing as “kinda public”. It’s a binary.
If an interested and observant member of the public can know, not merely surmise or guess but know, once the information is publicly available then it’s public.
It doesn’t depend on how many people know, it depends on how they can be expected to be able to know.
Can some law nerd tell me the difference between “insider trading” and just like, “hearing shit”? Like if I get drunk with some stock bro in he mentions that his company is buying another company or some shit is me going home and changing my investment portfolio “insider trading”? What demarcates info that’s just general public knowledge and secret shit that you shouldn’t be telling people about?
Basically if you have a privileged role and having that role is the source of your information.
So if you’re the company accountant and you know the company is about to miss a loan repayment well you only know that because you’re an accountant for the company, an insider, so you cannot act on that information. Likewise people on the board know the financials and will know that, eg that new merger just fell through so you know the bad news days or even weeks before the market. You only have this knowledge because you’re an insider.
But let’s say you live near the Tesla factory and you notice, just because you’re observant, that the number of trucks flowing to and from the factory have greatly diminished and you think to yourself “well that’s not good for Tesla” then you’re not an insider you’re just an observant person and can act on that.
Note that congress explicitly give themselves an exception and are completely legally allowed to trade on the enormous volume of insider information they have. It doesn’t matter if it’s top secret or a bill you’re about to vote on or whatever they are allowed to do it which is how a lot of them are rich.
It also counts if you're insider trading if someone with privileged information tells you to.
So if you get drunk with the company accountant and he tells you the company is about to miss a loan repayment, acting on that is insider trading.
So what’s the line between when info becomes public knowledge and when it’s something secret that trading on it is still “insider”? Like does it have to be reported to some agency first? Like if there was info that was kinda public but most people didn’t pay attention to it or knew how to interpret it correctly, but I did because of my position as an insider, would that still be insider trading?
Ideally it’s announced by the company in some formal way. Commonly there will be a quarterly update which includes important information which will affect the share price. It can also be that it leaks out and becomes sufficiently widely known that it’s considered to have become public, but the threshold isn’t clearly defined and you need a judge to work it out.
Basically once a member of the public reasonably could be aware of it then it’s public knowledge.
Maybe it’s more clear this way:
There is no such thing as “kinda public”. It’s a binary.
If an interested and observant member of the public can know, not merely surmise or guess but know, once the information is publicly available then it’s public.
It doesn’t depend on how many people know, it depends on how they can be expected to be able to know.