Re:Former Equifax Manager Charged with Insider Trading
by wahern on Thursday June 28, 2018 @04:05PM
(#17420030)
The SEC's interpretation of insider trading is far broader than what the courts have accepted as insider trading.
Corporate training courses tow the SEC line, but the outcomes of actual civil and criminal prosecutions would be far swifter and harsher if the law was as the SEC says.
In short, in some contexts friends and family absolutely can trade on material non-public information. In fact, in no case are they directly committing a crime; their liability is vicarious--it stems from some illegal behavior of the actual insider, which turns on more elements than the simple act of disclosing material, non-public information. If that illegal insider behavior is lacking then friends and family are no different than some random member of the public who caught an anonymous tip.[1]
Of course, as with anything illegal you have to factor in the risk of a jury wrongly convicting, especially when the legal elements so heavily rely on circumstantial evidence and even insinuation as with insider trading.
[1] If the SEC had their way then even trading on an anonymous tip would be illegal. Indeed, if the SEC had their way they could prosecute damn near anyone they wanted, at any time, because their legal theory is so ridiculously broad it would effectively shift the burden of proof onto the defendant.
Corporate training courses tow the SEC line, but the outcomes of actual civil and criminal prosecutions would be far swifter and harsher if the law was as the SEC says.
In short, in some contexts friends and family absolutely can trade on material non-public information. In fact, in no case are they directly committing a crime; their liability is vicarious--it stems from some illegal behavior of the actual insider, which turns on more elements than the simple act of disclosing material, non-public information. If that illegal insider behavior is lacking then friends and family are no different than some random member of the public who caught an anonymous tip.[1]
Of course, as with anything illegal you have to factor in the risk of a jury wrongly convicting, especially when the legal elements so heavily rely on circumstantial evidence and even insinuation as with insider trading.
[1] If the SEC had their way then even trading on an anonymous tip would be illegal. Indeed, if the SEC had their way they could prosecute damn near anyone they wanted, at any time, because their legal theory is so ridiculously broad it would effectively shift the burden of proof onto the defendant.