I also don’t believe that insider trading is immoral...The reason it’s illegal is to protect retail investors
That’s not the reason, at least according to Matt Levine and the SEC.
Another reason insider trading is immoral is that it robs the company of proprietary information
This is.
That’s fair, but in that case doing it officially for The Company should be allowed, and it’s not.
It depends on the merger agreement with LING—whether it allows either party to trade on this information. You’re ‘robbing’ proprietory information if this is disallowed. I’m unsure if merger agreements typically mention this, but if they don’t, then this is (legally)implicit.
Every contract between 2 parties implicitly or explicitly includes whether you’re allowed to trade on information you gain from your relationship. Examples
Employment contracts explicitly forbid employees from trading on material nonpublic information
However if the customer is a large company and it’s a vendor relationship, the contract might forbid insider trading
Companies are always allowed to trade on information they own/produce—otherwise it would be illegal for companies to ever issue shares or do buybacks.
Importantly, the law is about the information, not the stock of the company itself. It would have been completely legal for Pfizer and Moderna to trade hotel and airlines stocks before releasing their COVID vaccine trial results. This is ‘unfair’ to retail investors but that’s not what the law is about.
This is(maybe?) also why the SEC wants jurisdiction over crypto, prediction markets and other securities—these are all avenues for robbing other companies of proprietory information.
That’s not the reason, at least according to Matt Levine and the SEC.
This is.
It depends on the merger agreement with LING—whether it allows either party to trade on this information. You’re ‘robbing’ proprietory information if this is disallowed. I’m unsure if merger agreements typically mention this, but if they don’t, then this is (legally)implicit.
Every contract between 2 parties implicitly or explicitly includes whether you’re allowed to trade on information you gain from your relationship. Examples
Employment contracts explicitly forbid employees from trading on material nonpublic information
Customer relationships don’t—if you buy a product and discover it’s crap, you’re allowed to short the company. You’re allowed to buy Boeing puts while you’re in a plane which is currently crashing(unless their ticket policies prohibit this in the future).
However if the customer is a large company and it’s a vendor relationship, the contract might forbid insider trading
Companies are always allowed to trade on information they own/produce—otherwise it would be illegal for companies to ever issue shares or do buybacks.
Importantly, the law is about the information, not the stock of the company itself. It would have been completely legal for Pfizer and Moderna to trade hotel and airlines stocks before releasing their COVID vaccine trial results. This is ‘unfair’ to retail investors but that’s not what the law is about.
This is(maybe?) also why the SEC wants jurisdiction over crypto, prediction markets and other securities—these are all avenues for robbing other companies of proprietory information.