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>From: MikeSuesserott@xxxxxxxxxxx (Michael Suesserott)
>To: <editorial@xxxxxxxxxxxxx>, "Omega List" <omega-list@xxxxxxxxxx>
>Subject: AW: INTC/NDX
>Date: Fri, 22 Sep 2000 23:50:08 +0200
>
>
>Excellent example, OM! I hadn't known about this clause before, but now you
>made it crystal clear. Thanks.
>
>Michael Suesserott
>
>
>-----Ursprüngliche Nachricht-----
>Von: editorial@xxxxxxxxxxxxx [mailto:editorial@xxxxxxxxxxxxx]
>Gesendet: Friday, September 22, 2000 23:11
>An: Omega List
>Betreff: Re: INTC/NDX
>
>
>
>-- BW wrote:
>
> > Understood, but INTC, MSFT, CSCO, ORCL, and others
> > have a VERY high correlation with the NDX. What is
> > the law concerning them trading that?
>
>
>I don't understand the complaint? Remember, "insider trading", per se, is
>no problem - it simply must disclosed. It becomes a problem only when it
>is
>done "in breach of a fiduciary duty or other relationship of trust and
>confidence".
If they are selling the NDX based on not yet released negative news for INTC
they are "breaching fiduciary duty." In a "relationship of trust" that news
would be released before going short.
>No one trading the NDX based on their knowledge of INTC was violating a
>fiduciary duty to INTC shareholders. Without a breach of fiduciary duty,
>there's no problem with insiders making trades....
>
>Let me give an example. Let's say that your Uncle has a big corn farm.
>You
>decide that you want to take a look at the crops and trade some corn
>futures
>based on the results of your inspection. Now, let's say that you make big
>money doing that. Has there been an "insider" trading violation. I mean,
>after all, you did have material information which was not publicly
>available...
The proper analogy here would be if your Uncle was running the USDA and he
leaked you the corn crop report the day before it was made public. BTW, that
is illegal.
Your corn analogy is more like going down to the corner computer store and
asking them how's it going? Selling much Intel stuff? No? Let's short the
NDX.
>Answer: No, there's no violation. Why? Because you did not neglect any
>fiduciary duty.
>
>
>Good trading,
>
>OM (aka "Mr. Fiduciary")
>
>
>P.S. - Derivatives and stocks abide by totally different sets of rules
>anyway...
That's the whole point: if stocks and futures are dancing to the beat of the
same drum the rules should reflect that in an appropriate manner to prevent
abuse.
Aloha,
Bill Wynne
Bill@xxxxxxxxxxxxxxx
Sorry OM, I couldn't help myself after reading "excellent example."
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