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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: eims2000 who wrote (58578)	8/14/2000 10:08:40 AM
From: kodiak_bull	Read Replies (1) \| Respond to of 122087

"Certainly, anyone could have hired an engineer to check the BRX area and determined for themselves that there was no gold. They would not have to even make that information public (though if they were short then i suspect they would)" I don't quite understand why you might think so. In any event, insider information is privileged, material and nonpublic information. The simplest way to understand insider information is to focus on the "insider" part, that is, the privileged part. The Company in question has to, somehow, own the information. It has to be "inside" information. That's why it's called insider information. The thread got off on this overnight hike to the lake because of a hypo where somebody had material nonpublic information about a company that might, theoretically, depress the stock. Was it insider information? No. There was no privilege to the information (it wasn't a company discovery, a board resolution to buy back stock, a CEO's decision to launch or acquiesce to a tender offer, etc.). Example: I am short Bridgestone/Firestone stock and I hire a scientist to experiment on the tires in question. He determines that there is nothing wrong with the tires at all (remember when 60 Minutes assassinated Audi?) and that the real culprit is the construction of certain highways in the south, the use of too much tar which overheats the surface, or the radical slope of certain exit ramps. Whatever. I cover my shorts and write an article in "Tires Today" detailing my scientist's findings. Did I have a duty to wait to cover my shorts until my article had reached potential investors? I think not. I have material, nonpublic information, but I'm not an insider and the information isn't privileged in any way. Recently an analyst covering PRT determined, based on his own research, that Prime would probably have to cut its dividend or disappear. He got his clients out of the stock and then published his opinion. Management didn't tell him, the board didn't tell him--he just plain figured it out. The stock dropped on his change in opinion, and continued to plunge for a couple of weeks until management came out and cut the dividend, just as the analyst said. Then the stock truly tanked. No liability there, though, at least on the facts as they now exist. ARTC, huh?