[thaumasiotes]

> With inside information, it's not available to people outside the tipping network at any price.

Let's take a stylized version of a recent insider-trading case:

- A company ("Conglomacorp") employs someone ("Big Mouth") to dispense inside information to investors. Usually he does this by sitting in his office and answering phone calls. (This is common, and definitely legal.)

- A particular investor ("Shylock") develops a friendship with Big Mouth, and regularly goes to dinner with him. At dinner, Big Mouth tells this investor company information.

- Shylock trades in Conglomacorp stock.

- It's stipulated that if the information that Shylock received had been dispensed during work hours, there wouldn't have been any legal problems. But he is prosecuted on the theory that, since it was dispensed at dinner, outside of work hours, he should have been aware that trading on it was illegitimate.

How does this case fit in with your ideas of insider trading? It's certainly not the case that "[the inside information is] not available to people outside the tipping network at any price". You have to be a big enough investor that the investor relations desk has time for you, but that's open to anyone.

[mrchicity]

Answering calls with individual investors and giving out material information is illegal under Reg FD. Not sure about this particular fact pattern, but being told something officially vs. over dinner/drinks can have a different expectation as far as confidentiality goes. That seems sensible.

Also, FWIW, and I'm sure this wasn't your intent, but "Shylock" is considered an Anti-Semitic slur by many people.

[eru]

Compare http://time.com/3394403/shylock-biden/

[lmm]

"Reasonable and non-discriminatory" is a technical term, and I think it covers this case. If the company accepts everyone's calls, or everyone who owns more than x% of their stock, or charges you $y/minute, it's fine for them to reveal information that way. Revealing information to individuals that Big Mouth personally decides to go to dinner with is not ok.

[thaumasiotes]

Despite the fact that it's the same information? There's no distinction, in the example, between information that it's OK for Big Mouth to disclose and information that he can't disclose. Such forbidden information might exist and be known to Big Mouth, but Shylock didn't receive it. How can the only problem be that it was disclosed outside business hours?

[lmm]

If it happens in business hours then it's Conglomacorp's job to supervise Big Mouth properly and make sure he's not playing favourites (which as your sibling points out would be a Reg FD violation). If Shylock wants to trade on information then he needs to get it through the official channel where it's subject to compliance monitoring and all the rest of it. I'm fine with it being a crime for him to get information from Big Mouth in a way that bypasses those processes even if it turns out those processes wouldn't actually have blocked the information in this case.

[mrchicity]

https://en.wikipedia.org/wiki/Regulation_Fair_Disclosure