Black Unicorn writes:
Incorrect. The deciding factor is the court's determiniation of whether the information was "material non-public information." As the question of materiality is vague, subjective and subject to whim, even a low level employee is risking time and fines. Often materiality has exactly zero to do with what effect it may have on stock price.
Mr. Unicorn has it exactly right.
There is a simple solution to avoiding liability. Don't trade in your own company's stock.
In reality, of course, you are fairly safe so long as no one is looking for your head and you aren't trading based on company secrets. However, in theory, its possible to prosecute almost anyone.
Such restrictions have existed for decades. Why are you so stunned?
I guess this is all obvious to wall streeters like me, who live day to day with yellow xeroxed sheets being mass distributed to all employees informing us of the names of 150 companies that the firm has had peripheral dealings with recently that we aren't allowed to trade for some indeterminate period of time. People who don't live in regulatory paranoia land often just don't get that the SEC's regulatory authority is broad, based on very vague statutes, and capriciously applied. Thats reality, folks. I suppose since most people have never experienced it they don't understand what it's like.... Perry