My experience with insider trading
Reader comment on: Matt Levine on Insider Trading
Submitted by David in Cal (United States), Jan 20, 2016 21:31
My company had booked an enormous loss one quarter, which made the earnings of the conglomerate parent company quite low. The following quarter, I and my colleagues knew that our results for the quarter would be normal. However, the parent company's stock price was low, presumably because of bad earnings the prior quarter. Members of my company's management were not designated insiders. We had no knowledge of how other parts of the conglomerate would do. Some of us wanted to buy stock options in the parent company's stock.
So, did trading on our knowledge that our unit's quarterly earnings would be normal constitute "insider trading"? The parent company's lawyers advised us not to take a chance -- advice which I followed.
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