I work in finance, so I have had numerous trainings on NPMI from different points of view.
There are two things to address, and the framework to answer them is usually well know.
- Non-public: The general consensus I have seen is that if you are the one placing the trade, you should not be the one deciding whether the information is public. In simpler terms, if you have potentially NP information and are willing to trade it, let your compliance department decide whether it is public or not.
- Material: this one is harder to assess. For insider trading to trigger, there has to be a certain level of certainty of the information, and a certain level of impact on the price. This can be tricky to assess, if your boss is let go and you learn it, you have non public information, and I guess you could decide to short your company, because it's most likely not widely accepted as material, unless your boss is the Head of Research.
Anyway, the main takeaway is that whenever you are in a position to access sensible information, either trade under compliance approval, or don't trade at all. Everyone knows that, and the mere fact of not doing it is a signal of shady behavior IMHO.
> I work in finance, so I have had numerous trainings on NPMI from different points of view.
What point of view did you get training from other than the point of view of your company's compliance department? I've worked in trading for a long time and never got training from any other source.
Compliance should tell you to take a very conservative view of the law: they have basically nothing to gain from allowing you to trade in a gray area, but you might.
That doesn't mean the SEC or the District Court should take the same conservative view. They have to apply a balanced reading of the law and look at historical precedent.
Most people in the US do not have an employment contract. However last company I worked for did have business ethics you had to agree to every year and I believe one of the things was not shorting company stock.
There are two things to address, and the framework to answer them is usually well know.
- Non-public: The general consensus I have seen is that if you are the one placing the trade, you should not be the one deciding whether the information is public. In simpler terms, if you have potentially NP information and are willing to trade it, let your compliance department decide whether it is public or not.
- Material: this one is harder to assess. For insider trading to trigger, there has to be a certain level of certainty of the information, and a certain level of impact on the price. This can be tricky to assess, if your boss is let go and you learn it, you have non public information, and I guess you could decide to short your company, because it's most likely not widely accepted as material, unless your boss is the Head of Research.
Anyway, the main takeaway is that whenever you are in a position to access sensible information, either trade under compliance approval, or don't trade at all. Everyone knows that, and the mere fact of not doing it is a signal of shady behavior IMHO.