Courts will say that we will judge the timing of your action on the order, rather than the execution What about if someone had a standing order to purchase a stock at regular intervals? Judge it at the time of the order. No violation here because there was no material, non-public info at the time of the order. What if she has the ability to stop it? Does she have an obligation to do so? Yes. The best protection is to put into the standing order a provision disabling your ability to stop it. Or, some companies put a halt on trading at certain times before or after a public statement Standing orders are probably better What is the problem with the stock options? If the board issues stock options in and around the time a major event is to occur? Aside: stock options The right to purchase shares at a particular price If the stock jumps, you can receive a major windfall The board routinely gives out stock options What are you to say to the board if you have inside info? Conflicting duties FD/confidentiality v. insider trading If the board goes through, you have to keep in mind that you would be on the hook for insider trading The Court doesn’t really wrestle with this You could let them issue it and cancel it out Go halfway and say it isn’t a good idea but you cannot say why No real good answer Most people would probably just disclose Not just the insiders…what about the trades made by people you told? You are in fact liable for the info you gave them, even though they themselves are not liable Damages? The profit you make from buying or selling with insider info the profit you – have made without the insider info Should insider trading be a violation of securities laws? The SEC originally discussed insider trading as an equity issue Why can’t the response be…but I am the one that created the information Isn’t it unfair for those laboring to dig out the minerals to be deprived of reaping profits? The response on the other side is you reward them with bonuses, etc. rather than some kind of back door trading The other argument on the other side is it is never the laborers’ information to begin with, it is the SHs’ and public’s information
Courts will say that we will judge the timing of your action on the order, rather than the execution What about if someone had a standing order to purchase a stock at regular intervals? Judge it at the time of the order. No violation here because there was no material, non-public info at the time of the order. What if she has the ability to stop it? Does she have an obligation to do so? Yes. The best protection is to put into the standing order a provision disabling your ability to stop it. Or, some companies put a halt on trading at certain times before or after a public statement Standing orders are probably better What is the problem with the stock options? If the board issues stock options in and around the time a major event is to occur? Aside: stock options The right to purchase shares at a particular price If the stock jumps, you can receive a major windfall The board routinely gives out stock options What are you to say to the board if you have inside info? Conflicting duties FD/confidentiality v. insider trading If the board goes through, you have to keep in mind that you would be on the hook for insider trading The Court doesn’t really wrestle with this You could let them issue it and cancel it out Go halfway and say it isn’t a good idea but you cannot say why No real good answer Most people would probably just disclose Not just the insiders…what about the trades made by people you told? You are in fact liable for the info you gave them, even though they themselves are not liable Damages? The profit you make from buying or selling with insider info – the profit you have made without the insider info Should insider trading be a violation of securities laws? The SEC originally discussed insider trading as an equity issue Why can’t the response be…but I am the one that created the information Isn’t it unfair for those laboring to dig out the minerals to be deprived of reaping profits? The response on the other side is you reward them with bonuses, etc. rather than some kind of back door trading The other argument on the other side is it is never the laborers’ information to begin with, it is the SHs’ and public’s information
Corporations%20-%20Fairfax%20-%202011.docx