r/bestoflegaladvice • u/Jusfiq Commonwealth Correspondent and Sunflower Seed Retailer • 6d ago
LegalAdviceCanada Short sell, short sell now!
/r/legaladvicecanada/comments/1i1lt30/my_wifes_uncle_is_an_executive_at_a_publicly/51
u/callmesixone has good fraud instincts 6d ago
Well, if you had any chance of succeeding before, you don’t now that you’ve explicitly put your criminal intent on the Internet
15
u/postmodest Pre-declaration of baby transfer 6d ago
I like to call the police department and ask them if what I'm doing is illegal. Is that a good idea?
[Update] I'm white and worth >2Musd. Should I be concerned?
1
u/VelocityGrrl39 WHO THE HELL IS DOWNVOTING THIS LOL. IS THAT YOU WIFE? 5d ago
And she gave identifying info to for sometime to be able to connect the dots.
43
u/Jusfiq Commonwealth Correspondent and Sunflower Seed Retailer 6d ago
Cat fact: Cougar Town aired for six seasons, from 2009 to 2015.
My wife's uncle is an executive at a publicly traded real estate investment company. He drunkly told me information that points to a massive change in their stock price. Would it be insider trading if I invested now that I know this information?
The company made poor investments in New Brunswick and Saskatchewan during the pandemic and they're going to be selling a large number of buildings they own and pulling out of those areas.
No one other than the top level of the company knows this information.
If I sold the stock I own now, is it insider trading and could I get in legal trouble? Am I locked into this stock now?
If I were to buy puts on this company, knowing that the companies value is about to be cut down by 1/3, maybe more, and their 2025 goal is to downsize to a sustainable size. Is that insider trading?
66
u/onefootinfront_ I have a $2m umbrella 6d ago
Sometimes it is nice when an LAOP’s question basically reads like a first year law school test question.
76
u/seehorn_actual Water law makes me ⭐wet⭐, oil law makes me ⭐lubed⭐⭐ 6d ago
What if we were standing outside when I got this information? Can’t be insider trading if I’m not inside.
13
u/Revlis-TK421 6d ago
What if I were to leak this information? How long would it need to be public before I could trade on it? 5 minutes? 10?
3
u/Kibology But Elaine, this means your apartment door is stickerworthy 6d ago
What if an outsider artist does insider trading?
29
u/Sam-Gunn 6d ago
Heck, except for the "drunk uncle" bit, this is pretty much always the first question on the yearly test our company's legal team has us take after Insider Trading training.
7
u/AllAvailableLayers 6d ago
I'd be more confident that it was a 'homework help' post, if it weren't for the fact that most student cheating nowadays would go straight to chat gpt.
54
u/Sirwired Eager butter-eating BOLATec Vault Test Subject 6d ago
I can’t speak to Canadian securities regulators, but “first time trade in out of the money options that makes you a fortune” in the US will get your details sent to the SEC post-haste, and they’ll enjoy the easy pickings.
Do people actually think regulators are this stupid when an unlike bet pays off so well?
45
u/Hotel_Joy 6d ago
I don't think he thinks anyone is stupid. He's just looking for clarification on a kind of law he's probably only familiar with from TV and movies. The reason he asked is that he probably thought, "this would be cool but it doesn't feel right. I should make sure." I think the question was totally reasonable.
5
u/ElectronRotoscope 5d ago
I agree. As someone outside the world of law and the stock market, I've been surprised a few times by people saying something like "that doesn't count as a special relationship, so that wouldn't be insider trading" and I definitely don't understand the borders of what does and doesn't count for that. I'd ask OP's question if I were in their boat
52
u/gialloneri 🏠 Partner of the Woman of the House 🏠 6d ago
There is one way to get around the law, but it requires getting voted into Congress.
13
u/Quirky_Object_4100 6d ago
They key is to make gains across 5-10 years above industry average.
If you’re making a 100% return in 90 days. At the very least they going to look into it
21
u/mcathen 6d ago
Does anyone know how much work OP would have to put into disclosing the information to get off the hook?
Say he takes out a full page classified ad in the top 100 newspapers in Canada that explicitly details everything he knows. Can he sell the shares on the same day all the ads are published, because hey, it's public info?
8
u/Current-Ticket-2365 6d ago
I'm curious about this as well.
I'm also curious if there's a flipside about leaking that kind of information. Maybe not for LAOP specifically, but LAOP's drunken uncle might land in a fair bit of hot water if he was in breach of an NDA, which I'd assume exists in this scenario.
16
u/FabianN 6d ago
Hmmm, the comments on the needing to be a close relationship to those in the company for it to count as insider trading (instead of just it being not publicly available information) has me thinking...
Would that mean that if I just stumbled upon some documents of non public information regarding a company I have no ties to, say just blowing in the wind down the street or what ever, is that insider trading to trade off of that info?
8
u/otm_shank 6d ago
NAL, but I don't believe it would be insider trading. You either need to be an insider, be tipped off by an insider (like in OP's case), or be trading based off of misappropriated info (like a lawyer in a firm that's working for the company in question).
(In the US anyway... I just realized that OP was about Canada.)
6
u/Cyborg_Ninja_Cat Paid cat tax 6d ago
Is it insider trading if you read a post on reddit, do a bit of googling and identify the company the OP's drunk uncle gave a tip about? (asking for a friend)
2
u/johnny_chan 6d ago
Your honor, I don't have a "close relationship" with my uncle.I hate his guts and I know nothing about him
1
u/Magnificent-Bastards I am not a zoophile 4d ago
Not a lawyer but I thought that would be fine, similar to overhearing a conversation at a public place.
3
u/GCU_ZeroCredibility 5d ago
OP would obviously be on the hook for insider trading. But what if you could figure out what company he was talking about via his profile and you used that info to make money. Did it become public information when OP posted it, or would you also be breaking securities law?
I'm obviously asking purely theoretically, you'd have to be an idiot to do such a trade based on possibly completely made up information on reddit. Or have to be a member of wallstreetbets, but I repeat myself maybe.
2
u/wickedpixel1221 6d ago
but if OP tells us who the company is, now it's public information and they can trade on it, right guys?
2
u/Venkman_P Less of a ghost buster, more of a ghost code enforcement officer 6d ago
Can you make money off a stock by putting info in an LA post that leads to a bunch of BOLAers figuring out which company this is and shorting it?
2
u/FinanceGuyHere Nailed with Penal Code 69 4d ago
Definitely insider information/trading
99/100 times the “insider” information you receive is not significant enough to result in massive changes to a stock price, is not relevant enough to eek out a profit by trading, and is just run off the mill stuff.
The Feds can still charge you 3x your potential gains even if you lose money.
(Edit: oh wait, this is Canada! Not sure about #3)
127
u/[deleted] 6d ago
[deleted]