This is a rule of securities law, though sort of an unwritten one: There is no specific statute banning insider trading, but there is a long tradition of treating it as a form of securities fraud. Using that secret inside information to trade stock is a form of fraud, on someone. (It’s not always clear who: The people on the other side of your trades? The people whose information you misused? Both?)
By analogy, you might assume that using secret inside information to trade anything else is also a form of fraud. We talked about this in June in the context of an insider trading case against a former employee of OpenSea, a marketplace for nonfungible tokens; the employee allegedly knew in advance which NFTs would be advertised on OpenSea’s homepage and bought them so he could flip them at a profit. NFTs are (probably) not securities, so this is not securities fraud, so it’s not classic insider trading. But it’s so much like insider trading that prosecutors charged him with wire fraud anyway. If insider trading securities is securities fraud, then insider trading non-securities is wire fraud.
Anyway it’s not wire fraud but here’s a bourbon insider trading prosecution…
‘Enforcement 40’ for 2020
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