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It’s been a decade since I’ve gone anywhere near securities law, so I expect to be shot down by my OT partner (and clients) on this, but I think the difference between the employees and the neighbors who can see into the yard is that they were employees. There are always going to be gray areas about what is material knowledge. The law therefore will hold employees to a different standard than the general public. The lesson is, don’t trade your employer’s stock based on what you learn there. The hypothesized neighbors had information, and it may or may not have been material, but they were not insiders.
That said, probably a good case for prosecutorial discretion. A slap on the wrist and leave it at that. A lot of room for effective defense work even if the law was technically broken, so I won’t object to my esteemed partner taking the case.
Did anyone read that article in the NYT about the rise of the”Unwashed”-people who never use deodorant or wash much…..
I read it and thought of Rob b/c he would probably have something smart to say about these folks
However, I admit – I NEVER use shampoo unless at the salon when they do my highlights.
I just rinse my hair every other day with conditioner and that’s good enough – you really don’t need shampoo – trust me!
“By DeadCatBounce on November 1, 2010 10:06 AM
Unless they had extensive confidentiality agreements, they are NOT INSIDERS.”
Not even close to how the law looks at it. If you’re the secretary to an in-house lawyer and you become aware of an upcoming earnings announcement or some M&A activity, can you trade on it? [answer = no]
DIBS: What happens if a company sends out an announcement to all employees to immediately stop trading shares? You might as well announce to the market that you’re in play.
Yes, they probably should announce that there’s interest or that they solicited interest. It would be to the shareholders’ benefit.
The theoretic underpinnings of insider trading law make a lot of people queasy. It’s a difficult area.
DIBS: What happens if a company sends out an announcement to all employees to immediately stop trading shares? You might as well announce to the market that you’re in play.
And are you saying it’s the company’s obligation to stop its employees from insider trading? That’s a pretty liberal stance, isn’t it? What happened to personal responsibility and all that?
it’s laughable SEC threatens jail time for these small fries but just smacks the behinds of the big dawgs.
(btw, just reciting what I remember from studying for the CFA & various employer training. Happily have never had to deal with this in real life).
I am at work at 6AM. The rest of you are slackers!!!
It is ridiculous to accuse those two shmoes of insider trading. Unless they had extensive confidentiality agreements, they are NOT INSIDERS.
This is the SEC being lazy and useless. Without a doubt, there is too much high level insider trading, manipulation etc going on that is very hard to prosecute and is very well defended. But is a real threat to our free market system.
No one said there ever was a level playing field or that the market was fair.
If there was actually something material going on, the company should have notified all employees that they were precluded from trading the stock.