If you still think I'm wrong, show me where.
PMJI, but I'll take a crack.
"Insider trading" refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading violations may also include "tipping" such information, securities trading by the person "tipped," and securities trading by those who misappropriate such information.
From my recollection from corporate law class (at business school, I'm not a lawyer, but FWIW the professor was one of the world's top experts on securities law), the test that fails here is that the engineer had no fiduciary duty or relationship of trust or confidence. An officer, director, employee, and in most cases subcontractors and agents, have fiduciary duties. Their families and friends generally have a relationship of trust or confidence. The printer who prints a 10-K has at a minimum a relationship of trust or confidence, and probably a contractual duty as well.
If you have no such relationship with a company or its employees, and discover something on your own, the fact that it is non-public is not material. Many investors discover important facts about companies that only they are privy to, and they may or may not choose to share it with others. Where I come from, this is called due diligence, and last I checked it was not a crime.
Regards,
Fund |
