I am curious about how that type of activity doesn't constitute insider trading? Presumably having "bad news" would constitute material nonpublic information?
Because it's not nonpublic information. It's public information that no one else had put together the pieces on, yet.
(Contrary to some of the other commenters, you don't have to be an insider yourself to run afoul of the law. If the information is not public and you got someone to leak it to you, for example. https://www.investor.gov/introduction-investing/investing-ba...)
Exactly. Did an oil company exec tell you that their sales are down before the earnings are released? That's insider trading. Did you hire a helicopter with a thermal camera to see how full their storage tanks are? That's perfectly legal.
It might be insider trading in some countries, but it isn't in America. It's perfectly legal to trade on information you found out through your own research and didn't tell anybody about.
Simply trading on MNPI is not insider trading. You must have a fiduciary duty to protect said MNPI.
If I do some analysis and reveal some MNPI for myself, it's perfectly legal to trade on that since I do not have a fiduciary duty to any publicly traded firms.
They do the equivalent of investigative journalism. Arguably everything they know is public, just no one has looked or put all the pieces together until they do a press release.
(Contrary to some of the other commenters, you don't have to be an insider yourself to run afoul of the law. If the information is not public and you got someone to leak it to you, for example. https://www.investor.gov/introduction-investing/investing-ba...)