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Insider trade on Splunk acquisition?

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417 points mkmk | 4 comments | 21 Sep 23 15:58 UTC | HN request time: 1.847s | source
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YeBanKo ◴[21 Sep 23 16:37 UTC] No.37600196[source]▶
Is there any legit way in which whoever made this trade could have got a wind of a potential acquisition without relying on inside knowledge?
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arcticbull ◴[21 Sep 23 16:39 UTC] No.37600226[source]▶
Knowing about the acquisition puts you in possession of material nonpublic information. It's unlawful to trade on the basis of such information whether you work at the company or not. Passing it along is 'tipping' and acting on it is still 'insider trading.'
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function_seven ◴[21 Sep 23 16:44 UTC] No.37600301[source]▶
My understanding is that having material nonpublic information is not—in itself—enough to make a trade illegal. As long as you're a true outsider, and didn't get that info using illegal means, you can trade on it.

Maybe this whale was tracking tail numbers, drove down to the executive airport, and saw that Cisco's chief M&A guy had a huge grin on his face as he stepped onto the plane.

(Okay, I doubt that highly, but it is a scenario)

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1. arcticbull ◴[21 Sep 23 16:58 UTC] No.37600504[source]▶
I initially thought this wasn't the case, but did some research - so for posterity: if you overhear the information in a public setting you may be ok. It depends on whether you have a duty of trust, apparently, and personally I'd run it by a lawyer before firing up Robinhood. [1] Although (1) IANAL and (2) you may still be answering difficult questions if you structure your trades the way this individual did.

[1] https://money.com/insider-trading-examples/

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2. rs999gti ◴[21 Sep 23 17:31 UTC] No.37601022[source]▶
There is precedent that even if you are in possession of info that will eventually become public, which you then trade on, you can still be convicted of insider trading.

For example, a Printer for Business Week and a Stock Broker traded on pre-publication information and were convicted of insider trading.

https://corporateinsiderstrading.wordpress.com/2012/02/01/bu...

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3. sokoloff ◴[21 Sep 23 17:52 UTC] No.37601346[source]▶
> for using stock information in “Business Week” magazine before it was distributed to the public

They traded on information that was non-public at the time of the trade. Why shouldn't that be treated exactly as trading on news of this merger before it was announced? (The merger was eventually going to be known to the public as well, right?)

4. lokar ◴[21 Sep 23 18:14 UTC] No.37601644[source]▶
The printer has an obligation of trust. Someone overhearing your loud phone conversation in public does not.