Talk:Insider trading
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[edit] General Content of Article
After reading this, its clear that obviously Americans have been the majority contributors.. but there's such an imbalance in that UK legislation is getting a couple of sentences whereas US is covered in several paragraphs. Obviously some infomation would overlap but still. As a UK student, I cannot be confident that most of the general description is correct for my country.
-Si—Preceding unsigned comment added by 82.69.194.158 (talk) 21:36, 21 February 2007
short-swing profits should be mentioned here.
- Any information you can add to the UK section would be quite welcome! Please be sure to cite your sources when you do. Thank you for your help! —Elipongo (Talk|contribs) 01:06, 22 February 2007 (UTC)
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- Isn't the UK law on insider trading mostly subsumed by the EU Market Abuse Directive, with actual UK implementation in a state of flux? Anybody an expert on the Market Abuse Directive? Epstein's Mother 03:15, 22 February 2007 (UTC)
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- The definition of insider trading does not seem appropriate for jurisdictions outside USA. In the UK, "insiders" include any who have information not in the public domain, including advisers or individuals not connected to the company. I shall try to find some UK and/or EU definitions to add in. PatrickHadfield (talk) 10:51, 7 May 2008 (UTC)
The intro could describe the concept more clearly. As someone who knows little about business or economics etc. it wasn't the easiest of things to understand. — Lee Carré 01:15, 19 June 2007 (UTC)
Actually I was thinking the same thing. I don't know if this represents a world view as much a general description followed by an United States of America case study. -CallipygianSchoolGirl (talk) 03:37, 4 June 2008 (UTC)
[edit] Cut from text
- Nevertheless, circumstances can occur when the geologist would be committing fraud if he did not disclose the information, e.g. when he had been hired by Farmer Smith to assess the geology of the farm.
This is a non sequitur. This is an example of a professional who does not act in the best interest of his client - like a lawyer who doesn't act on behalf of his client or a broker who front runs his customer. —Preceding unsigned comment added by 68.198.48.12 (talk) 03:27, 8 February 2008 (UTC)
- However, analogous activities such as front running are illegal under U.S. commodity and futures trading laws. For example, a commodity broker can be charged with fraud if he or she receives a large purchase order from a client (one likely to affect the price of that commodity) and then purchases that commodity before executing the client's order in order to benefit from the anticipated price increase.
Front running is not insider trading and nor is it the analogue to insider trading in the commodities market as this seems to suggest. Front running is a different concept and is also illegal in stock markets. —Preceding unsigned comment added by 68.198.48.12 (talk) 03:22, 8 February 2008 (UTC)
This was tagged 2 weeks ago:
- Because insider trading is hard to prove and it's not even clear if it's good or bad for the market, it could be argued[who?] that its regulation adds unnecessary complexity to trading, and in addition binds valuable resources of federal enforcement agencies which could be used more usefully.
Not sure whose opinion this is. While I agree with it, personally, this is an encyclopedia. Statement like this need attribution. --Uncle Ed 19:43, 22 March 2007 (UTC)
[edit] Arguements for Insider trading by governments
I reverted this section, simply because it is not referenced in any way and is therefore original research WP:NOR. With some sort of references it could certainly go in. To me, the thinking itself does not look so original (Briefly approx. "governemnts may trade on information that only they have and give benefit to the public" - this is in many ways standard thinking in many fields) but the original part is in labeling it "insider trading." If other people use this label, it should certainly go in - but as it stood it is just confusing. Smallbones 09:46, 30 March 2007 (UTC)
- I agree (and think you are too kind in your description of the "research"). It reads like someone who imagines they just thought up the idea that a government could borrow billions of dollars, refuse to pay it back, and lower taxes as a result. Epstein's Mother 14:39, 4 April 2007 (UTC)
[edit] Spam links
I deleted the links to SECform4.com, which is repeatedly added back in by someone who seems to go around Wikipedia adding in advertising links. In its place, I've added in a link to the most recent filings of the SEC's Edgar database, which has the most recent disclosure forms by corporate insiders on their trades of shares in companies in which they are officers, directors, or of which they control either 5 percent or 10 percent of the shares. Hopefully, this will provide readers with any information they want without subjecting them to the hard sell of a trading company. Epstein's Mother 18:49, 28 April 2007 (UTC)
- I agree and have removed them again. They seem to violate WP:EL's guidance about links normally to be avoided (items 1 and 3, at the very least). Deli nk 19:27, 1 May 2007 (UTC)
[edit] American insider trading laws
There is a new addition on a recently introduced on the so-called "Stop Trading on Congressional Knowledge Act" bill. The paragraph doesn't indicate whether this bill has any Senate sponsors or the odds that it will be enacted. Since bills are introduced all the time and only a comparatively small number are passed, I suggest deleting this paragraph until the bill advances further. After all, this section is about what the law is, not what the law could (maybe) become. (In addition, the description provided of the bill doesn't indicate how it is any different from Rule 10b-5. Presumably, the SEC would still pursue someone for a 10b-5 violation if they traded based on material non-public information, even if that material non-public information came from Congress. This is essentially the same type of case that has been brought in the past against individuals trading on material non-public information acquired from the Food and Drug Administration or the Agriculture Depart.) Let me know if you disagree. Epstein's Mother 16:28, 29 May 2007 (UTC)
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- In May of 2007, representatives Brian Baird and Louise Slaughter introduced a bill entitled the "Stop Trading on Congressional Knowledge Act, or STOCK Act." that would hold congressional and federal employees liable for stock trades they made using information they gained through their jobs. The bill would also seek to regulate so called "Political Intelligence" firms that research government activities and sell the information to financial managers.[1]
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- It might be an interesting detail to add - since the "Political intelligence" regulation is quite different from current law. But the bill probably won't pass (the PI stuff is too different). There's lots of other stuff that should be added first, e.g. non-US law. I think that all adds up to a temporary weak keep, IMHO. Smallbones 18:36, 29 May 2007 (UTC)
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Simple question, which I will pose as an example: If I invent something in my garage that allows automobiles to run on water, will my shorting of ExxonMobil constitute insider trading?
I'm guessing no.
66.32.14.236 (talk) 22:42, 22 January 2008 (UTC)
- No, because you don't owe any duty to ExxonMobil. However, if you invented it on behalf of ExxonMobil (or, possibly, even on behalf of somebody else), and you shorted before they made it public or were able to take advantage of the opportunity themselves, you might be. Epstein's Mother (talk) 05:25, 23 January 2008 (UTC)
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- Unfortunately, Epstein, your answer is a non sequitor because the prosecution of insider trading laws in the US hasn't been limited to those with duties to the issuer. O'Hagan, for example, had no duty to the issuer in whose stock he was trading. This is important because if the government merely wanted to prohibit breach of fiduciary obligations, it could just use that language, and drop the language of "insider trading" altogether.
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- A better answer to User 66 is that he could short ExxonMobil safely because there is so much that happens in between an invention and its successful exploitation that short selling would still be very risky. Indeed, on his hypothetical I'm not at all sure the information to which he is privy would even be considered material, which excludes further prosecutorial quesries right there. --Christofurio (talk) 21:21, 8 February 2008 (UTC)
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- I disagree. O'Hagan is predicated on a fraud-on-the-market theory, which is far more complex than I think you are letting on. In addition, Switzer is still good law. In addition in addition, the method of insider trading and the risk of the trades has nothing to do with whether the law is being violated. At most you are just saying the chances of getting busted is lower, not that you won't get busted.Epstein's Mother (talk) 02:12, 10 February 2008 (UTC)
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- What you call its "complexity" may be what User 66 is worried about. At any rate, the overly simple statement was yours, not mine. One person's complexity is another person's injustice-waiting-to-happen. Or hasn't it already? O'Hagan had no fiduciary responsibility (in the old-fashioned not-so-complicated sense of that phrase!) to the issuer of the stock in which he traded. --Christofurio (talk) 20:37, 10 February 2008 (UTC) Also, the "materiality" of information has everything to do with whether trading upon it violates the prohibition on insider trading. And it seems a safe rule of thumb that information that doesn't significantly reduce the risk of a trade can't be considered material. --Christofurio (talk) 15:20, 11 February 2008 (UTC) Furthermore, the language of the circuit court’s opinion in Texas Gulf Sulpher was much more sweeping than was necessary to reach its conclusion: "The only regulatory objective" wrote the circuit judge "is that access to material information be enjoyed equally…." Despite the mollifying connotations of the word “only” in that sentence, this objective seems quite a demanding one. And there's nothing there about fiduciary obligations.
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- Indeed, critics soon pointed out that a random local individual, standing outside TGS company offices in Timmins Ontario, who had observed hurried comings-and-goings there, might have taken an educated guess as to what might be going on, and bought shares of TGS stock. Since not everyone could have been at that place at the right time, there would be an asymmetry of information. Access to material information would not be “enjoyed equally” by that buyer and a potential seller of the stock. So could the observant local have been held liable for insider trading under the theory of that case? Unfortunately, yes. Fortunately, the courts haven't stuck at that high-water-mark of the insider-trading prohibition. Yet the uncertainties raised by the above langauge remain. --Christofurio (talk) 13:57, 20 May 2008 (UTC)
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- It would not because (1) you're not a public company and are not required to disclose that information, (2) you have no business dealings with, and provide no services to, Exxon.—DMCer™ 00:40, 11 February 2008 (UTC)
[edit] Need for a new warning label
Since we're on the subject of legal interpretation, I think this article should have a heading warning readers that this article does not offer legal advice and may not be legally accurate. I say this because some of it may not be 100% legally correct and somebody may interpret it as OK to do something because of what is written when, in fact, you could get into serious trouble if you are not careful. For example, the heading "Tracking Insider Trades" it says, "As of December 2005 companies are required to announce times to their employees as to when they can safely trade without being accused of trading on inside information." This is a gross simplification and in no way can a company announce a time that an insider is free to trade on material non-public information. All of that said, I don't know how to put up this kind of warning graphic. Epstein's Mother (talk) 02:18, 10 February 2008 (UTC)
- agreed that we're not 100% accurate here and may have stepped over the line to providing legal advice (myself included). I looked around the WP:Law law project and law portal and couldn't find any template related to that. Perhaps it's obvious that we're (trying) to provide legal information rather than legal advice. A couple of templates that might fit in somewhere (feel free to remove) are right below this. Smallbones (talk) 14:17, 10 February 2008 (UTC)
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Shouldn't there be a section detailing significant insider trading cases in summary form?--Bassettcat (talk) 12:58, 8 May 2008 (UTC)
[edit] Removed item on legal insider trading
I removed the reference to legal trading on inside information that contained the example of overhearing the CEO of a company talk about the company in a restaurant. The text said that trading on that information would not be illegal. It certainly is illegal, and made illegal by SEC Rule 14e-3, which makes it illegal to trade while in possession on material non-public information that one knows is material and nonpublic, and came from an insider.69.141.112.37 (talk) 21:49, 31 May 2008 (UTC)Larry Lawyer
- Larry,
- You didn't make a change in the article! I did that following - inserting the word "might," instead of "would."
- "you might not be guilty of insider trading unless there was some closer connection between you, the company, or the company officers."
- could you be a bit more specific on this - the only "Rule 14e-3" I could find on the SEC site was under the Williams Act, and requires that a tender offer has been made. More info please. Smallbones (talk) 23:29, 31 May 2008 (UTC)
