From: azur@netcom.com (Steve Schear)
Date: Thu, 26 Sep 1996 15:13:23 +0800
To: cypherpunks@toad.com
Subject: Re: Insider Trading - What constitutes "Disclosure" ?
Message-ID: <v02130501ae6f3f513585@[10.0.2.15]>
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>Often the choice faced by the investor who has material non-public
>information is characterized as "disclose or abstain," meaning that the
>investor may either trade after disclosing or abstain from trading on the
>information.
>
>A few people have asked me what constitutes disclosure.
>
>I've not researched the latest cases, but the generally accepted "best
>description" can be found in SEC v. Texas Gulf Sulpher Co., 401 F.2d 833
>(2d Cir.1968), cert. denied.
>
> The reading of a news release, which promoted Coates into
>action, is merely the first step in the process of dissemination required
>for compliance with the regulatory objective of providing all investors
>with an equal opportuinity to make informed investment judgements.
>Assuming that the contents of the official release could have been
>instantaneously be acted upon, at the minimum Coates should have waited
>until the news could reasonably have been expcted to appear over the media
>of widest circulation, the Dow Jones broad tape, rather than hastening to
>insure an advantage to himself and his broker son-in-law.
>

It would seem to me that if I operated an open listserver, upon which
financial information regularly appeared and which any trader (serious or
otherwise) might subscribe, my information should be held in the same legal
regard as DJ. If not, the SEC has in effect created a monopoly for
Dow-Jones and its ilk and effectively impede or excluded other news sources
(e.g., Internet feeds) as legit means for generating market awareness, and
therefore revenue.  I and many others occassionally trade on public
information from narrower sources than DJ (e.g., market newsletters).
Sometimes DJ and others pick up info from these sources and sometimes they
don't (or not immediately).  Does that mean those trading on this data
published not yet picked up by DJ may be trading illegally?  If so, this is
totally unjust and wrongheaded.

-- Steve