Dealbreaker’s Matt Levine reports: You’re only guilty of criminal insider trading, in
if: you trade on information that is material and nonpublic, and some other
stuff. The other stuff is mostly stuff
that only a lawyer could love, but man do they love it. It consists most
importantly of the rule that the person who gives you the material nonpublic
information needs to have done so in breach of some duty to keep the
information secret and in order to get some personal benefit for himself. If a
stranger just wanders up to you and says “I’m the CEO of Smerbafife and it’s a
giant fraud, gotta go,” and you trade on that: you’re probably good.
This doesn’t help very often, though, since the personal benefit for the tipper doesn’t have to be an explicit bribe, or an explicit anything; just a desire to spice up your friendship with some material nonpublic information can qualify. It might help Anthony Chiasson and Todd Newman though….
Sound like a technicality? Find out more at http://dealbreaker.com/2013/06/hedge-fund-managers-didnt-know-they-were-paying-for-their-inside-information/#more-105715