Is This Insider Trading?

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What if "my" company was a proprietorship? What if this "insider" information is thoughts in your head? Say you own a large private corporation and you're the single largest customer of some publicly held supplier. For whatever reason, you decide that you will terminate that relationship. Is it insider trading to short that supplier's stock? What about in the reverse case where you buy ahead of the decision to give a contract to some company?

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If you have a significant relationship with an issuer that gives you access to material, non-public information you can be considered a "temporary insider" that has a duty not to trade on the information. This covers people like accountants, lawyers, and major suppliers.

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What about cases where you buy ahead of forming a relationship? And how can anyone actually prove that you traded on the insider information, if that information happens to be your own decision?

[Soya]

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What about cases where you buy ahead of forming a relationship? And how can anyone actually prove that you traded on the insider information, if that information happens to be your own decision?

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It would probably depend on how far in advance you purchase in advance of forming the relationship and how significant the relationship is, but I don't know of any cases that test this specific issue.
The second issue has a clear answer and is known as the "use" or "possession" question. Courts had split on whether the government needed to show that you actually used the inside information in making the trade or instead just show that you had inside information when you traded. The SEC solved the problem by adopting the possession rule, so if you have inside info and you trade you are in violation of 10b-5. It's nice to be the government.

[Phone Booth]

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What about cases where you buy ahead of forming a relationship? And how can anyone actually prove that you traded on the insider information, if that information happens to be your own decision?

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It would probably depend on how far in advance you purchase in advance of forming the relationship and how significant the relationship is, but I don't know of any cases that test this specific issue.
The second issue has a clear answer and is known as the "use" or "possession" question. Courts had split on whether the government needed to show that you actually used the inside information in making the trade or instead just show that you had inside information when you traded. The SEC solved the problem by adopting the possession rule, so if you have inside info and you trade you are in violation of 10b-5. It's nice to be the government.

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Sorry I was being unclear but what I meant was that how do they show that you were in possession of the information at the time of the trade, if the information is something that was formed in your head. As in, one can always say he made the decision after the trade, thus the information did not exist at the time of the trade. I guess circumstantial evidence is all they need, but it seems all very murky to me.