Yes - this is what I was thinking. Physicians performing clinical trials (unlike some of those involved in designing them) are usually not employees of the pharmaceutical company, but I'd think it would still be good policy for the firms expressly to prohibit this kind of activity anyway ... for their own purposes and reputation-protection, quite apart from it obviously being good "public policy"? I ought to know, but don't, whether they actually do this routinely.
As the SEC applies these Insider Trading rules to stocks, I wonder if the CFTC applies similar Insider Trading rules to commodity futures? I would guess that professional commodity traders get "insider" info all the time regarding commercial speculator and hedging activity. It doesn't seem all that different.
Until Dodd-Frank there were no restrictions for commodities, now there are some. CFTC just brought their first case under those rules (http://www.cftc.gov/idc/groups/publ...ents/legalpleading/enfmotazediorder120215.pdf) although to me the line between frontrunning and insider trading is blurry in this case.
Mark Cuban in his fight against the SEC over Mama.com explained how insane they can be over insider trading. I know guys who worked and traded without getting caught, they never caught them. Cuban speak's about a low level manager who saw Limos, Cadillac all coming to his small company. He had no idea but figured out they probably were going to buy out the company he worked at. Is that Insider Trading because it happened to me with a retail company I bought the common when I saw some of KKRs people show up. All this guy went on was seeing fancy cars showing up, he bought the Calls and the SEC is fighting him over ill-gotten gains. I remember buying Mama.com because it started to fly from being a penny stock and sold. Rumor had it Cuban was buying the stock the same day I jumped on that swing trade.
Why are the SEC insane? The law defines insider trading as "a person trades on the basis of material nonpublic information if a trader is "aware" of the material nonpublic information when making the purchase or sale." Nothing in there about having to be a "high level manager" or that you had to have something handed to you on a spreadsheet. What you described pretty clearly fits into possession of nonpublic information that you and the low level manager were aware was nonpublic. If I had known a bunch of KKR people were showing up at your company I may have decided to trade it, you had an advantage over me based solely on your insider position. Same with the low level manager you cite. If they were in the office building across the street and saw it then it's fair game, but if you work there you're an insider. The SEC's job is to enforce the law. If you don't like the law, the congress who passed it and President who signed it should be the one's you're calling "insane" not the civil servants who do the job they're being paid to do! Certainly they aren't going to catch everyone and prosecutorial discretion is a thing that's been around as long as the Republic, but if you break the law, claiming the SEC is "insane" isn't a very credible defense.
So how does this entire thread apply when somebody like Jamie Dimon buys millions worth of his own stock? I mean, I never really understood that. Is that not insider trading? Or is it because he has a time restriction on when he can sell?
Whole set of disclosure rules on that which allow any of us to see the insider's transactions that levels the playing field somewhat. There's actually a good body of literature on the abnormal returns you can get by simply following reported insider sentiment.
You got that right. I went long WYNN when good ole Steveie bought a bunch at $57ish... true to form I took a quick profit, but WYNN marched north of $100 at one point within a few months.
the law doesn't clearly define insider trading. it is like pornography. a supreme court justice once said I can't define it but I know it when I see it.
I'm surprised if the guy was actually harassed by the SEC vs just getting a letter asking him to explain his rationale. Seeing limos would qualify as mosaic theory I would think.