undefined | Better HN

0 pointstptacek8y ago0 comments

Insider trading is an agency problem. You're in trouble if you have a fiduciary duty to someone else (either overtly or implied, directly or indirectly) and you take advantage of insider information to trade against their interests.

Using information only you have to trade in the market is not "insider trading" by itself; in fact, it's the only way the markets can actually function!

0 comments

jonknee8y ago

That’s not quite the case, it’s insider trading if you’re using non public material information no matter what account it benefits.

https://www.sec.gov/fast-answers/answersinsiderhtm.html

> The SEC adopted new Rules 10b5-1 and 10b5-2 to resolve two insider trading issues where the courts have disagreed. Rule 10b5-1 provides that a person trades on the basis of material nonpublic information if a trader is "aware" of the material nonpublic information when making the purchase or sale.

tptacekOP8y ago

According to the actual text of the rules, both are particular to preexisting agency relationships (really, to insiders of public companies).

Are you just pointing out that the SEC will come after you even if you're not trading against the interests of your shareholders/clients/whatever?

j / k navigate · click thread line to collapse