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Comment by maxerickson | Hacker News Reader

Yes. I'm not a lawyer and all that, but counting trucks on the street wouldn't be nonpublic information, even if it is more available to some group of outside people.

I think it is also clearly the case that concrete insider knowledge will be considered differently than deductions.

This goes on and on about the meaning of the term:

http://www.investopedia.com/exam-guide/cfa-level-1/ethics-st...

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OK, lets get the camel's nose inside the tent. Imagine I am a janitor who works at Acme Inc. I notice that the board meets every Tuesday at 2:00 PM and they always laugh and seem to have fun. I can't hear anything behind the glass doors but it seems that they are all merry. Now, fast forward some time and I see that the meetings are not merry any more. It looks like there is a lot of yelling and banging on the conference room table all around. They all come out from the board room calm and composed though. As usual, I can't hear anything.

Now, I pass on this information to someone. They short the stock based on this information alone. Have I or the person I talked to broken insider trading rules? I'd say no.

I don't think I have an interesting opinion about whether it is insider trading (meaning I don't think I could predict the legal outcome).

I think it would be loudly argued that the person receiving the information was aware of why it was valuable.

I'd say it is considered inside information if you convey any notion of how the business goes to a select (closed) group of people, and it will be illegal of them to act on that information.

Is it illegal for you to act on that information? I should think so, but it will be hard to prove unless you do a unreasonably large trade.

The SEC would say yes. There was an employee who worked at a rail yard who noticed certain visitors and other things and decided to buy the stock. The company was purchased shortly thereafter.

How did a couple of railroad yard workers catch wind of a multibillion-dollar leveraged buyout? The complaint says they suspected something was up when they saw “people dressed in business attire” taking tours of the rail yards. It suggests their curiosity was further piqued by a day-long rail trip the Fortress folks took in a special train car reserved for visitors.

http://dealbook.nytimes.com/2010/10/01/s-e-c-charges-railroa...

Well at least they lost this case. Good common sense showed by the Jury.

http://www.lexology.com/library/detail.aspx?g=84aea8bb-af1b-...

If the information isn't market-moving (i.e. would not cause a reasonable investor to change their prices - a judgement for the court) then you're in the clear.

If it is market-moving and Acme lets you share that information then they're violating Reg FD.

If it is market-moving and the person you talked to knows that you weren't supposed to share it, that's insider trading. When does the court say they should have known that you weren't supposed to share the information? When they know that you received a personal benefit for it (or a few other circumstances e.g. they know you agreed to keep it confidential).

This is particularly important because often these cases are about investor relations people rather than janitors. If an investor relations person tells a trader something, they can trade on it. If a trader bribes an investor relations person to tell them something, they can't trade on it. (The law aligns with common sense here IMO). Now, what if an investor relations person tells an intermediary something, and then they tell a trader that thing, and the trader trades on it? The law here is that the trader has to know that the investor relations person was bribed - because otherwise they have no reason to think they're committing a crime.

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