Comment by pixl97

2 days ago

>1. People who have insider information,

I mean, most stock trading prevents insider trading, unless of course you're a in congress.

Seemingly regulators consider this a bug in every other market type, but suddenly this gambling market allows it?

> breathless anxiety about this

All fun and games until people start dying from it.

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pixl97

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valkmit  2 days ago

Insider trading in stocks are prohibited but not for the reason most people think. It has nothing to do with someone having an unfair advantage in an informational sense, and everything to do with fiduciary responsibility.

The CEO and executive team has fiduciary responsibility to act in the financial best interest of the shareholders. Your broker too.

If you have insider info (Obtained legally) but no fiduciary responsibility you can act on it. That’s why congress members trading US equities based on decisions they’re privy to is not, from a legal perspective, insider trading. They don’t have a fiduciary responsibility to their constituents

  • colinmorelli  2 days ago

    This comment is not really correct

    1. The misappropriation theory of insider trading covers anyone who trades on material non public information sourced through a trusted relationship regardless of any fiduciary duty to the company. For example, if I tell my personal attorney a non public fact about the company I work at, and they trade on that information, they absolutely can be found guilty of insider trading despite having no relationship to the company at hand.

    2. Congress is explicitly covered by insider trading law, which was affirmed in the STOCK Act of 2012. The fact that they’re rarely indicted has more to do with the legal and political challenges associated with doing so, not the legality of the act.

    • floam  8 hours ago

      > The misappropriation theory of insider trading covers anyone who trades on material non public information sourced through a trusted relationship regardless of any fiduciary duty to the company. For example, if I tell my personal attorney a non public fact about the company I work at, and they trade on that information, they absolutely can be found guilty of insider trading despite having no relationship to the company at hand.

      Huh. The lawyer example works because attorneys have a very specific, enforceable duty of confidentiality. Swap that relationship out and the conclusion may change. As written, the comment slides from "duty-based misuse of information" to "any private knowledge you shouldn’t have," which is not the same thing.

      A lawyer (not my lawyer) gave me his off-the-cuff opinion on this scenario:

      A pharmacologically-literate clinical trial participant for a novel new drug strongly suspects he did not receive the placebo/comparator drug, based on the subjective effects, plus their own pharmacology knowledge, experience with the placebo, and the research on the candidate drug.

      However, this drug was not therapeutic for him, the side effects were onerous, or perhaps he believes the trial will be halted. Whatever their reasoning behind his inference, no details of others’ experiences were leaked to him, blinding was maintained; protocol was followed. He didn’t base this on a lab readout.

      Based on his understanding of published research on the candidate drug, and projecting from his lived experience as lab rat, he believes this trial should disappoint shareholders. At the very least, shares may be priced too high.

      Can the participant, based on this inference, invest $$$ shorting the pharma firm? This drug is considered the firm’s last best hope.

      Their answer was yes, basically. He can trade on this non-public info.

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