Is this considered Insider Trading?

[Psychhhh]

Jurisdiction

California

Say my friend is a low-level salesperson/agent at a major bank and he has a morning conference call discussing a new evaluation for a particular stock. These calls are not discussing earnings or mergers or clinical trial results or anything typically considered as nonpublic information. They are simply discussing a new price target for a stock and why this stock is undervalued and should be bought. Several hours later, the bank publically releases its new price target evaluation. Say my friend tells me to trade this stock, and I do so before the bank publically releases this statement. Disclaimer: I have not actually done this yet but I am wondering if this is this illegal. Does this constitute insider trading? Any guidance would be very appreciated!

 

[army judge]

Say my friend tells me to trade this stock, and I do so before the bank publically releases this statement.

Insider trading can almost be anything the SEC or USA says it is.

Insider Trading | Meaning | Legal vs Illegal Insider Trading

Illegal insider trading is when the insiders want to benefit from the company information at the cost of the company. Legal insider trading is when the insiders of the company trade shares but at the same time report the trade to the Securities and Exchanges Commission (SEC).

If your "spidy" senses are tingling, STOP talking to your "friend" about ANYTHING related to buying or selling stocks.

The stock market is nothing but a casino.

Yes, they don't call it that, but there are no "get rich quick" schemes if you decide to play in that swamp.

You are free to do whatever you wish to do.

You are also free to take stupid risks.

 

[zddoodah]

he has a morning conference call discussing a new evaluation for a particular stock.

A conference call with whom? Whose evaluation? Why would "a low-level salesperson/agent at a . . . bank" be discussing stock evaluations?

Does this constitute insider trading?

Probably not, but maybe. It depends on who gave your friend the information.

 

[Tax Counsel]

Does this constitute insider trading? Any guidance would be very appreciated!

Insider trading is the use of information about the company that is known to insiders of that company in order to gain advantage in trading the securities of that company. Assuming that no one in the bank is an insider of the corporation and that the bank is not using any information from an insider in its evaluation of the stock then there is no insider trading. The bank is just making a call on the stock based on the same information available to anyone else. You are simply betting the bank knows how to evaluate that information in placing the trade.

However, if the bank represents the company on any financial matters, handles the accounts of the company, or is otherwise privy to or using any nonpublic information it has obtained about the company in forming its evaluation then there is a risk you would be engaged in insider trading.