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When I took my 6 & 63 exams a while back it seems there has to be intent.

Based on what you stated, if a husband came home and told his wife that he didn’t feel like going to dinner with friends because he just found out that they’d been sold some contaminated wheat gluten and shipped it out in pet food. And then the wife calls the friends and tells them why she’s cancelling dinner, and the appliance repair guy fixing the fridge overhears, and shorts his pet food stock, the husband is in trouble?

I don’t think so.

Remember the SEC was not able to get Martha Stewart on insider trading after her stock broker told her the drug company CEO was selling his stock.

When I took my 6 & 63 exams a while back it seems there has to be intent.

Well perhaps the class I took was being overly cautious and strict in its interpretation. This was a class for employees of the company who either might be privy to inside information and or had stock options.

I had to watch a film from the SEC (and yes I had to strain to stay awake -LOL) and it used an example not unlike mine as how I could get into trouble.

You are right in that there has to be intent on my part like I tell the hubby that “we poisoned the dog food today. The legal department is in panic mode and our CFO had to be pulled off the window ledge and our stock is going to tank as soon as this becomes public”. If I say to the hubby – “tell your sister to sell her stock this week (and feed her dog Alpo)” then that’s a pretty clear violation.

If the hubby goes ahead and tells his sister without my saying he should or telling my sister-in-law myself – well it’s hard to prove intent but it’s also equally hard to disprove intent on my part. If I just say “tell your sister to feed her dog Alpo” without saying why, I’m probably in the clear. But if I purposely or inadvertently passed on information that is not available to the general public, I understood I could be prosecuted if anyone that received that information benefited.

But it was stressed over and over – if you have any inside knowledge that could effect the stock price that is not public knowledge – you don’t talk about it – to anyone - period! And you don't buy or sell stock or advise anyone else to based on inside information.

In any case it scared me enough to be very, very careful about exercising my stock options given I knew a lot of stuff about where the company was heading financially that hadn’t yet been made public. For example one of my many areas of responsibility was managing Payroll. I knew about a coming “reduction in force” terminations and who was getting the axe even before my boss the comptroller did. I also knew about potential acquisitions and the results of the FDA approvals of our drugs before it went out on PR NewsWire.

This was why I was very careful about what I said to anyone about work. My (ex) husband would ask “how was work today” I’d say “It was Jane’s birthday – we had cake. It was good. I finally got a new stapler today and it is a piece of crap. The guy in Purchasing is a jerk.”