> So it's illegal "when an insider makes a gift of confidential information to a trading relative or friend." But if you read that too literally, you run right back into the first problem. There you are, at your job, talking on the phone with a company's investor relations department. The IR guy helps you with some questions about your model. You get off the phone convinced that the company is a buy. You go to buy stock. But wait. Your relationship with the IR guy is pretty cordial. You mentioned your love of fishing, and he said, "Hey, we ought to go fishing together sometime," and you said, "Sure, that sounds great," not that either of you meant it.

That's messed up. It should be a breach of fiduciary duty to continue to interface as investor relations with an investor who you have established a friendship with. Being friendly on the phone is one thing, but join family vacations? As the relationship becomes closer, the fishier any exclusive information provided should smell.

You become friends with someone? At a certain point both the investor and and investore relations personel should have to hand off the professional relationship to colleages to avoid the risk of insider trading charges.

So don't give confidential information to outsiders of the company, whether they are friends or not?

I don't see the issue.

"Confidential" is a big word. There is a lot of internal information about a company that is not strictly labeled "confidential." Putting that aside, I think Levine's point, which he makes in the piece I linked and has made in several other columns, is relevant:

> Er. Um. Sure. But another component of effective professional analysis of the value of a company's stock is talking to the company. There's a reason that companies have earnings calls. There's a reason that, when analysts get into the weeds on those calls, the companies say things like, "We'll follow up with you individually afterwards." There's a reason that companies selling stocks or bonds do one-on-one meetings with potential buyers. There's a reason that companies not selling stocks and bonds also do one-on-one meetings with current and potential investors. There's a reason that companies have investor relations departments full of people who talk to current and potential investors.

All of this gets to a point Levine has also made many times over, which is there is no explicit statute outlawing insider trading. Which seems crazy! People go to prison over it. But when you sit down and try to define it, it becomes even more of a mess, so here we are.