Speaking from experience: it's not illegal insider trading unless you violate a confidentiality agreement or fiduciary duty.
I specifically say "illegal insider trading" because insider trading is not intrinsically illegal. The SEC distinguishes between insider trading and illegal insider trading (and by extension, so does the compliance department of every investment firm, bank and hedge fund). If, through your own research, you discover information which is both material and nonpublic, and you proceed to trade on that information, you are insider trading. However it is not illegal unless you have thereby broken an agreement or duty (namely with the company itself, its affiliates or your own clients) at any part of the process.
In practice this usually means the information is tainted if any of the following is true:
1) you have a fiduciary duty to the shareholders of the company in question,
2) you are employed by, or contract for, the company in question,
3) you are employed by, or contract for, an affiliate of the company (such as a vendor),
4) you disobeyed terms and conditions of service related to use of the product related to the information you found.
Obviously the standard disclaimers apply: I am not a lawyer, don't take potential legal advice from a random HN commenter, etc.
Source: I used to work in financial forecasting using alternative data.
Yeah, Matt Levine explains what could constitute insider trading in plain language. feel sorry, for the potato farmer.
Always good reads from him about finance and financial markets & life in general
In America, this kind of research in explicitly encouraged, and very much NOT insider trading according to the SEC. Insider trading has to involved _theft_, not just insider knowledge.
If you overhear someone talking about an impending acquisition in a coffee shop, and you trade on that information, you're quite safe in the US. European countries can and do consider that insider trading, though.
No. You can trade on material, nonpublic data as much as you'd like. Insider trading is not illegal unless you're breaking a confidentiality agreement or fiduciary duty.
If you manage to discover confidential data in a way that does not compromise such an agreement or duty, you're fine. Obviously you should engage with an attorney instead of taking legal advice from a random HN comment, but there's really no issue with this. Information asymmetry is a fundamental part of the market and not illegal on its own.
Source: I used to work in financial forecasting using significant amounts of alternative data.
Yeah, "non-public, material information" is what I'm used to seeing, and I think that classifies this air-traffic data just fine. The coffee shop example, however, sounds like it's both non-public and material, yet in the US is not considered insider trading. So you might say "non-public material information" is necessary, but not sufficient, grounds for an insider trading case.
Well, it is publically available in that anyone can subscribe and get the data. I’d venture to guess anyone can get the tail number flight patterns from the FAA. The value add is matching that to who owns or is leasing the plane.
Well, the whole point of markets is to incorporate information into the price. So if I've done research and think company X is undervalued, I'm going to buy its stock, the price is going to go up, and now that research of mine is better incorporated into the stock price of X.
As long as I didn't _take_ that info from anyone (e.g. I can't hack emails, or bribe an accountant, etc. etc.), this is markets behaving exactly as we want them to.
Oh, okay. I think I see now. The stock market has always fascinated me and I admit I understand very little of it. I wouldn't know where to start learning about the ins and outs of it.
I'm short on good resources, but you might enjoy Matt Levine's Money Stuff newsletter; I always look forward to reading it, and all of this "what is insider trading" comes directly from his writing in recent weeks.
