From: Harvey Newstrom (mail@HarveyNewstrom.com)
Date: Thu Jun 05 2003 - 19:04:16 MDT
gts wrote,
>
> Harvey Newstrom wrote:
>
> > Why insider trading is illegal for the trader:
> > There is nothing in the law that prevents people from using their own
> > brains to predict stocks and make lots of money.
>
> If you use your brain to acquire information before it is reported to the
> newspapers, and act on that information, then that action can be
> considered insider trading.
Consider it this way: Selling stock to someone else is a sales transaction
of property. You are offering to sell a known commodity that is described
by public disclosure statements. If you know those statements are false
due to insider information, and you sell the product to a buyer who
believes those public disclosures are true, you have cheated the buyer.
You knew that what the person said they wanted to buy was not what you were
actually going to deliver to them. It is exactly like selling a car that
doesn't run, or selling a race-horse that has just died, or selling food
that has spoiled, or selling swamp land in Florida. The law doesn't allow
this. You can't sell property you know is worthless just because the buyer
doesn't know it yet.
-- Harvey Newstrom, CISM, CISSP, IAM, IBMCP, GSEC Certified Security Manager, Professional, Assessor, Consultant, Technician <HarveyNewstrom.com> <Newstaff.com>
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