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+---- Thread: Would this qualify as insider trading? (/thread-8368.html)
Would this qualify as insider trading? - Breand - 11-18-2010
Got an email memo this morning at 8:45AM (before markets opened) stating the company would begin exploring spinning off part of it's business into a seperate entity. I knew the stock would pop based on that info, but I held back on buying because it felt sketchy. Sure enough stock is up 8% today on the news. Would having that info and buying with it qualify as insider trading?
Re: Would this qualify as insider trading? - Snowreap - 11-18-2010
yes, since you knew the stock would pop based on that information, that information was clearly "material". making trades on the basis of material non-public information is the very definition of "insider trading".
but if the information in that email had also been released to the public as a press release, then acting on it would not be insider trading (although you might find yourself having to prove that it was that information, and nothing else, that led you to decide to trade. that is, triggering a trade based on vague public information combined with specific insider information is still insider trading).
-ken
Re: Would this qualify as insider trading? - Breand - 11-18-2010
it was released publicly at the same time, altho it's possible I got it 15 minutes before the public =)
Re: Would this qualify as insider trading? - Grieve - 11-18-2010
Probably safest to wait until you see the press release show up in Yahoo Finance. We just took a complusory course on insider trading here, funnily enough, although this seems to be in a bit of a grey area. Hopefully you benefitted anyway, via stock options or 401k stock.
For future reference, the correct action to take when these things happen is to immediately shoot me an e-mail saying "buy 300 shares of CVC RIGHT NOW".
Re: Would this qualify as insider trading? - Vanraw - 11-18-2010
It depends on the source of the information. First of all I am assuming you do not work for the company, because that would be an easy call. The main question is how did the person get the info and who is the person that provided you the info.
Trading on rumor is not insider training. So if some guy said, I heard that this is blaq bla, but he does not work for the company, and you dont have specific knowledge that he obtained the data from inside information, then its fair game. Betting on speculation is not illegal. But if the guys said, Joe who is the CEO told me bla bla bla, then you would be in the "Martha" place.
Re: Would this qualify as insider trading? - Breand - 11-18-2010
I work for the company. The CEO sent out an email at 8:45AM before the markets opened. He attached the memo that would be distributed to the public in the email. I could have taken that info and bought shares right at the market open and probably could have gotten at least a few percentage points of profit.
Re: Would this qualify as insider trading? - Vanraw - 11-18-2010
yea, good thing you didnt.
Odd that he would send it out early.
Re: Would this qualify as insider trading? - Grieve - 11-18-2010
You didn't get it early - ETrade shows a BusinessWire release at 7:30am - "Cablevision Board of Directors Authorizes Exploration of Possible Rainbow Spin-off". If anything, your boss waited good and long before letting you guys know.
It's the same for us - we've aquired a lot of companies recently, and I always find out online before we get the email from the CEO...