LOL. Mother, my tactic is being right. You classify anyone who defends a position steadfastly as someone who somehow can't admit to being wrong. Curiously dismissive, don't you think?
Yet it was you who, when Steve Goldman verified my position on marginable issues, crept away uncharacteristically silent - a sign of re-education. I think, among other things, that you need to learn the difference between an opinion - which really can't be wrong, however stupid it may seem - and facts. I'm presenting facts.
First, I don't think that the other folks are saying that I'm wrong: I believe that the other folks are arguing that the facts I'm presenting describe ridiculous rules that infringe upon what certain people can or should be able to do, specifically in terms of their trading activity. Which, of course, is terrific: the cacophony of dissent is the harmony of democracy.
With regard to this situation: I'm saying that if the engineers had information which was material and nonpublic, and traded off of it, the trades would have violated 10b-5 and subsequently would be illegal, insider trades. That's it - there is absolutely no arguing this: it's not a matter of my position or opinion, it's a matter of Federal securities law.
sec.gov
Insider Trading
"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.
Examples of insider trading cases that have been brought by the SEC are cases against:
Corporate officers, directors, and employees who traded the corporation's securities after learning of significant, confidential corporate developments;
Friends, business associates, family members, and other "tippees" of such officers, directors, and employees, who traded the securities after receiving such information;
Employees of law, banking, brokerage and printing firms who were given such information to provide services to the corporation whose securities they traded;
Government employees who learned of such information because of their employment by the government; and
Other persons who misappropriated, and took advantage of, confidential information from their employers.
Because insider trading undermines investor confidence in the fairness and integrity of the securities markets, the SEC has treated the detection and prosecution of insider trading violations as one of its enforcement priorities.
***
Now, as for your assertion that "t's been pretty well established that the engineers in the BXMNF case were not in possession of privileged information," LOL!
On what grounds do you base that? Who or what established that the engineers were not in possession of privileged information?
You? A periodical that you can give a link to?
And how well is "pretty well"? By your definition? By mine?
My assertion is based upon the letter of the law: given the situation described, the engineer was in possession of privileged information which was both material (could be reasonably expected to impact the stock price: otherwise, why trade on it!) and was nonpublic (not publicly disseminated), and his actions would violate the "disclose or abstain" duty described under the misappropriation theory of insider trading.
sec.gov
In 1961, in the case of In re Cady Roberts & Co., the Securities and Exchange Commission, applying a broad construction of the provisions, held that they do. The Commission held that the duty or obligations of the corporate insider could attach to those outside the insiders' realm in certain circumstances. The Commission reasoned in language worth quoting:
Analytically, the obligation [not to engage in insider trading] rests on two principal elements: first, the existence of a relationship giving access, directly or indirectly, to information intended to be available only for a corporate purpose and not for the personal benefit of anyone, and second, the inherent unfairness involved where a party takes advantage of such information knowing it is unavailable to those with whom he is dealing. In considering these elements under the broad language of the anti-fraud provisions we are not to be circumscribed by fine distinctions and rigid classifications. Thus, it is our task here to identify those persons who are in a special relationship with a company and privy to its internal affairs, and thereby suffer correlative duties in trading in its securities. Intimacy demands restraint lest the uninformed be exploited.
Based on this reasoning, the Commission held that a broker who traded while in possession of nonpublic information he received from a company director violated Rule 10b-5. The Commission adopted the "disclose or abstain rule": insiders, and those who would come to be known as "temporary" or "constructive" insiders, who possess material nonpublic information, must disclose it before trading or abstain from trading until the information is publicly disseminated.
Several years later in the case of SEC v. Texas Gulf Sulphur Co., a federal circuit court supported the Commission's ruling in Cady, stating that anyone in possession of inside information is required either to disclose the information publicly or refrain from trading. The court expressed the view that no one should be allowed to trade with the benefit of inside information because it operates as a fraud all other buyers and sellers in the market. This was the broadest formulation of prohibited insider trading.
Period.
And mind you - lest your pride get in the way of admitting that I am correct - that's not my period; that period is based upon not only the Securities Exchange Act of 1934 but 30 years of Supreme Court rulings, as well.
If you still think I'm wrong, show me where. Don't change the scenario, don't add or delete any details, just show me where my description of illegal insider trading as it applies to an engineer who trades off of information gathered in a survey as described would not apply. Where I have the law incorrectly cited, or what exemptions this engineer might find himself under.
Show me where and how I'm wrong in my description of this scenario as one of a 10b-5 violation.
This is my challenge to you.
LPS5 |
