To: Jeffrey S. Mitchell who wrote (7019 ) 1/23/2005 9:48:05 AM From: Jeffrey S. Mitchell Read Replies (2) | Respond to That's a very good letter from Elgindy's lawyers. The government was essentially saying that anyone who uncovers the fact a principle in a publicly traded company had an undisclosed rap sheet (e.g. by simply doing a public Pacer search), if you traded on that information without first disclosing it to investors in a broad manner (e.g. a press release), you were guilty of insider trading!To prove Insider Trading under the Misappropriation Theory, the government must also establish, beyond a reasonable doubt, that the information ROYER obtained through his position as an FBI agent, and used or shared for an improper purposed, was “non-public.”The fact that some criminal records are “publicly” available in the sense that they can be found in a public place if a person is looking for them, knows where they are being kept, and has the information required as a practical matter to link the records to specific individuals connected to particular companies, does not mean that these records are “public” for the purposes of the insider trading laws.9 When an investor with such information chooses to disclose it, the non-public information remains non-public 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. In order to be public for insider trading purposes, information must have been disseminated broadly to the investing public generally and not just to a special person or group. There must have been dissemination of the information such that the company’s stock price has already adjusted to reflect that information.
