Anthony @ Equity Investigations, Dear Anthony, Message Board

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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony,

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To: Pluvia who wrote (90056)	1/26/2005 9:46:19 AM
From: Pluvia	Read Replies (1) of 122087

also: Message 20975785 the government argues that its instruction as to when information becomes “public” must be adopted because it is “true to the law in this Circuit,” citing SEC v. Mayhew, 121 F.3d 44, 50 (2d Cir. 1997). Gov’t. Let. at 1-2. However, in Mayhew, the court noted that information becomes public when disclosed “to achieve a broad dissemination to the investing public generally and without favoring any special person or group...or when, although known by only a few persons, their trading on it has caused the information to be fully impounded into the price of the stock.” Id. at 50 (emphasis added). Although Mayhew made clear two separate bases on which information can become public, the government’s proposed charge conflates them as one. It provides, for instance, that “[w]hen an investor with such information chooses to disclose it, the non-public information remains nonpublic for purposes of the insider trading laws until it has been effectively disseminated in a manner sufficient to insure its availability to the investing public and to insure that the market has had an opportunity to ‘absorb’ the disclosed information.” (emphasis added). Under the government’s understanding of insider trading, Mr. Elgindy would be guilty of the offense even if he traded on publicly available information, so long as it had yet been incorporated into the price of a stock. Among other things, this language would render virtually any trader who promptly acted on information provided on the Bloomberg service guilty of insider trading.

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