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  #41  
Old 11-27-2007, 10:15 AM
stinkypete stinkypete is offline
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Default Re: Is This Insider Trading?

[ QUOTE ]
1) Yes
2) Yes
3) Yes

in every circumstance you are privy to information that is not public knowledge. when you act on this information you are committing insider trading.

[/ QUOTE ]

for those of you saying #3 is insider trading, what if you go play blackjack at the wynn with your gambling addict friend, who loses, and on your way out he says something like "[censored] man, i hate this place, i'm gonna blow this [censored] up". you short wynn when you get home. if this isn't insider trading, where do you draw the line?
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  #42  
Old 11-27-2007, 12:36 PM
john kane john kane is offline
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Default Re: Is This Insider Trading?

im doing a insider trading training programme today. fwiw so far has confirmed 1) is definitely no becuase:

"inside information is not of the competitor's shares, thus the person is just acting on a hunch"

edit: not saying this is better than what has already been said, just doing this training reminded me of this thread.
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  #43  
Old 11-27-2007, 12:44 PM
Phone Booth Phone Booth is offline
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Default Re: Is This Insider Trading?

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[ QUOTE ]

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?

[/ QUOTE ]
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.

[/ QUOTE ]

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.
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  #44  
Old 11-27-2007, 12:54 PM
DesertCat DesertCat is offline
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Default Re: Is This Insider Trading?

[ QUOTE ]
im doing a insider trading training programme today.

[/ QUOTE ]

Your first mistake is that you are doing a "programme", instead of a "program". We may have lifted much of our legal system from yours, but yours is still far superior and commonsense definitions of insider trading in jolly old England aren't necessarily applicable to 'merica.

Is John Kane your real name? I always thought it would be a cool name for a superhero. "John Kane, easygoing stock broker by day, the Greenmail Raider by night, scourge of underperforming companies and greedy CEOs!"
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  #45  
Old 11-27-2007, 01:17 PM
john kane john kane is offline
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Default Re: Is This Insider Trading?

oops with the programme. ah sorry i thought they'd be international rules rather than country specific.

my real name is not john kane but i may change it by deed poll to john kane. i got the kane bit from a book i read years ago and so when i decided on my first poker account i went for john kane (john as i felt it went well with kane).
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  #46  
Old 11-27-2007, 02:05 PM
Shoe Shoe is offline
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Default Re: Is This Insider Trading?

[ QUOTE ]
[ QUOTE ]
im doing a insider trading training programme today.

[/ QUOTE ]

Your first mistake is that you are doing a "programme", instead of a "program". We may have lifted much of our legal system from yours, but yours is still far superior and commonsense definitions of insider trading in jolly old England aren't necessarily applicable to 'merica.

Is John Kane your real name? I always thought it would be a cool name for a superhero. "John Kane, easygoing stock broker by day, the Greenmail Raider by night, scourge of underperforming companies and greedy CEOs!"

[/ QUOTE ]

I had a professer whose name was John Kane.
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  #47  
Old 11-27-2007, 03:18 PM
J.A.Sucker J.A.Sucker is offline
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Default Re: Is This Insider Trading?

1. This is clearly insider trading. I'm in R & D and we have to be very careful about this. You'd also be in trouble if you told anyone else to short a competitor's stock.

2. Close, but probably yes. If you make any effort to overhear the conversation, such as bending in to listen, it becomes more clearly insider trading, but who's gonna prosecute you?

3. I don't think so.
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  #48  
Old 11-28-2007, 05:12 AM
pig4bill pig4bill is offline
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Default Re: Is This Insider Trading?

[ QUOTE ]
[ QUOTE ]
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1. Favorable clinical trials at my company haven't been announced yet. So I can't buy the stock. But I short a competitor's stock.

2. I'm at a pay phone and I overhear the president of IBM lamenting the surprisingly bad earnings for this quarter as he speaks to the chairman on the neigboring phone. I short IBM.

3. I hear two apparent terrorists in the neigboring booth at a restaurant talk about throwing a bomb into the Wynn casino every day for a week. I notify the FBI but I also short the stock.

[/ QUOTE ]


you are using material nonpublic information to make bets on the market. are you dumb, this is all so cut and dry insider trading.... you understand that the idea behind insider trading is that you abuse the system and take advantage of NONPUBLIC information.

[/ QUOTE ]

So how come most of the people on this thread are saying 2 and 3 are almost certainly NOT insider trading? Since they have more knowledge of the subject than me, and since I am dumb for not realizing that all three cases are clearly insider trading, then the only possible answer to my question is, "they are imbeciles".

[/ QUOTE ]

Because it's not "information", it's hearsay.
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  #49  
Old 11-28-2007, 07:00 AM
Rotating Rabbit Rotating Rabbit is offline
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Default Re: Is This Insider Trading?

[ QUOTE ]
[ QUOTE ]
1) Yes
2) Yes
3) Yes

in every circumstance you are privy to information that is not public knowledge. when you act on this information you are committing insider trading.

[/ QUOTE ]

for those of you saying #3 is insider trading, what if you go play blackjack at the wynn with your gambling addict friend, who loses, and on your way out he says something like "[censored] man, i hate this place, i'm gonna blow this [censored] up". you short wynn when you get home. if this isn't insider trading, where do you draw the line?

[/ QUOTE ]

With the example you give, the line is drawn at the definition of MATERIAL. And in such cases the law nearly always refers to 'in the opinion of a reasonable person with expert knowledge in finance/relevant area'.

Its obvious to say, but it must be both NON PUBLIC and MATEIRAL.

In both David's #3 and that example the information is certainly non public. David's #3 says he overhears every day for a week, and CLEARLY believes the story since he notifies the FBI, which means that as a reasonable person he felt it was MATERIAL. In your example, no reasonable person could, given the information, believe a man having a bad day was actually going to blow up a huge casino, it is NOT material. So your example is clearly not inside trading.

The trick comes in defining what is material for a 'reasonable person'. But these two examples obviously fall either side of this hard-to-define line.

And as for the CFA 'always' including a more extreme wrong (but reasonable) option etc, this is true if by 'always' you mean 'occasionally' !
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