SCO insider trading watch

Posted Jul 17, 2003 13:01 UTC (Thu) by gleef (guest, #1004) [Link]

Disclaimer: I am not a lawyer, and I'm certainly not an SEC lawyer. The below is not legal advice.

It's probably not illegal, but we won't know for sure until some time passes and more information emerges. IIRC there are two big things the SEC looks for regarding Insider Trading:

1. Insiders fraudulently presenting wrong information about the company to manipulate share price; and
2. Insiders who know something about the company that's about to be announced that will affect share price, and sell or buy shares accordingly, prior to the announcement

I would not be surprised if there is a lot of 1 going on, but it's hard to prove something was fraud as opposed to stupidity. As for 2, we can't tell if these sell-offs meet that criterion until we see what comes next. Regardless, I think the guy who sold all his shares and left the company could easily argue (whether its true or not) that he was disgusted with the new direction the company was going and wanted nothing more to do with them, and be pretty safe from insider trading charges.