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    Insider trade on Splunk acquisition?

    (twitter.com)
    417 points mkmk | 11 comments | 21 Sep 23 15:58 UTC | HN request time: 0.618s | source | bottom
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    kypro ◴[21 Sep 23 18:16 UTC] No.37601673[source]▶
    I know this isn't what happened, but what if one day I'm waiting for the bus and I over hear a guy talking on their phone about an imminent acquisition?

    1. Would that still fall under insider trading even if the information was accidentally heard, and even if I wasn't 100% sure of its accuracy?

    2. If I had no clear connection to the company how would it be proven that I was trading on insider information? Surely it's not enough just to say the trade was statistically unlikely, or is it?

    replies(15): >>37601721 #>>37601730 #>>37601752 #>>37601767 #>>37601801 #>>37601931 #>>37602055 #>>37602097 #>>37602107 #>>37602179 #>>37602306 #>>37602419 #>>37602589 #>>37602619 #>>37602877 #
    1. bragr ◴[21 Sep 23 18:21 UTC] No.37601730[source]▶
    It's still not public information (e.g. "Material Nonpublic Information"). You can't trade on it.

    See 17 CFR § 240.10b5-1 "Trading “on the basis of” material nonpublic information in insider trading cases", particularly section (b) "Awareness of material nonpublic information."

    https://www.law.cornell.edu/cfr/text/17/240.10b5-1

    replies(4): >>37601835 #>>37601951 #>>37602258 #>>37602548 #
    2. yieldcrv ◴[21 Sep 23 18:27 UTC] No.37601835[source]▶
    disagree, the SEC has lost a lot of cases on this idea

    if you’re not affiliated with the company and simply overhear and trade, make enough to retain a lawyer real quick

    replies(1): >>37602361 #
    3. mock-possum ◴[21 Sep 23 18:32 UTC] No.37601951[source]▶
    A guy speaking out loud at a bus stop isn’t public information?
    replies(1): >>37602007 #
    4. bragr ◴[21 Sep 23 18:36 UTC] No.37602007[source]▶
    The SEC has very specific rules and even specific form [1] they must file when companies release information like this.

    [1] https://www.sec.gov/forms

    replies(3): >>37602371 #>>37602895 #>>37613715 #
    5. bluehorizon2 ◴[21 Sep 23 18:53 UTC] No.37602258[source]▶
    No this is not correct. If someone spreads a rumor and you don’t know that the information is from an authoritative source it’s not MNPI. It’s speculation.

    If someone anonymously posts on Twitter that Splunk is going to get acquired by Cisco and you immediately buy options, and you don’t know who this Twitter account is, then it’s speculation. Also it’s no longer non-public information if someone posts it on Twitter.

    replies(1): >>37602409 #
    6. mcguire ◴[21 Sep 23 19:00 UTC] No.37602361[source]▶
    Oh, no doubt. There will be an investigation looking for a relationship.
    7. jahewson ◴[21 Sep 23 19:00 UTC] No.37602371{3}[source]▶
    So if the founder goes on TV and announces their merger then it’s nonpublic information until they file the form? Everyone who trades on that is insider trading? That can’t be right.
    8. ikiris ◴[21 Sep 23 19:02 UTC] No.37602409[source]▶
    "if someone posts it on Twitter."

    Yes, if you trade on public information, then it's not material non public information.

    9. Retric ◴[21 Sep 23 19:10 UTC] No.37602548[source]▶
    It becomes public information when shared with the public, unintentionally or not. The specific kinds of relationships involved are a big deal. It’s fine to tell a waitress you closed a huge deal and she can even trade on it, but tell your wife and she can’t trade stocks on that information.

    “insiders must be breaching a fiduciary duty owed to their corporation when they trade on or tip confidential corporate information. This stipulation almost always means that an insider cannot trade on such information and cannot tip others about it if the insider stands to gain by doing so. https://sloanreview.mit.edu/article/when-is-it-legal-to-trad...

    In the case where an unrelated outsider overhears the information that’s public disclosure. And the information no longer needs to be treated by random people as non-public.

    10. snowwrestler ◴[21 Sep 23 19:29 UTC] No.37602895{3}[source]▶
    Those rules regulate the company, not random people at a bus stop.
    11. mock-possum ◴[22 Sep 23 15:59 UTC] No.37613715{3}[source]▶
    Right but - that means the company employee gets in trouble for making the information public (via announcing it in public at the bus stop) - not that I would get in trouble for hearing it and acting on it, right?