That's not correct. If you trade on information tipped to you by insiders, you are also guilty of insider trading, even though you didn't have any fiduciary duty towards the company.
You can still be guilty of insider trading and not be an insider. If you get inside information from an insider and trade on it, even though you are not an insider or even if you didn't know the person you got it from was an insider, you are still in violation of the law in the US
The law doesn't care how stupid your plan was. You could plan a theft in the middle of the day stealing $5 and still be a crime
Insider trading is trading with the knowledge of privileged information not available to public investors. If he did it, it's a crime. Doesn't matter if he made $50 million or $5.
> Acting on information that is not public knowledge for your benefit is insider trading, regardless of where/how you received the information
This just isn't correct. In the US, you need to have a "relationship of trust or confidence" with the company in order to be insider trading. Don't take my word for it, here's the SEC [0]:
> Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, on the basis of material, nonpublic information about the security.
And here's the case law [1]:
> a tippee cannot be held liable unless the Government proves that the tippee knew both (i) that the initial tipper breached a fiduciary duty in disclosing material nonpublic information in exchange for a personal benefit and (ii) that the tipper had received a personal benefit for divulging the information.
> If you buy stock on a public market based on this information, you're not really keeping a secret, are you?
No, and you're insider trading. But if you could reasonably have been expected to keep the secret, the leaker is off the hook. I'll let you look up the precedent for that yourself. Like I said, I'm not a lawyer, and not pretending to be one, but I do know a thing or two about this area. If you are a lawyer, consider asking your law school for a refund.
https://www.kiplinger.com/article/investing/t052-c008-s001-w...
Case #1.
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