When it comes to insider transactions, does it matter if it is a direct or indirect
purchase of the stock?
Answers
186 points
HoughtonAndAtkeson answered 3 months ago …
For the purpose of assigning guilt, no, it doesn't.
Insider trading can occur indirectly by tipping someone off or sharing information with someone who can then use it to purchase securities.
Remember, too, that insider trading isn't simply limited to stocks. Inside traders can also be guilty of buying and selling call or put options to take advantage of the underlying stock's movement.
677 points
Dragonsbane answered 3 months ago …
I don't think she's referring to insider trading, but rather insider transactions.
ie Trades done by management or shareholders controlling more than 10% of the company.
If that's the case, I don't really know what an indirect transaction is, though I would guess it would be exercising stock options to purchase shares at a price below the current market price.
A direct transaction would be the outright purchase/sale of stock on the open market at the current market price.
If I'm right with the definitions, which is no guarantee. A direct purchase of stock would be a far more significant vote of confidence, since they are paying the market price to buy the stock (as opposed to a below market price that anyone would pay).
If management is purchasing stock by exercising stock options that were awarded to them as part of their compensation structure, they will usually sell that stock immediately for tax reasons.
Maybe someone else can let you know if I got the indirect transaction right.
103 points
tldwg04011 answered 3 months ago …
To follow up on Dragonsbane's answer, I believe an indirect transaction ALSO may be a purchase for a trust for a family member, which would be a close second to buying for oneself, in my humble opinion.
Read more from tldwg04011 flag as abuse great answer
108 points
andbham answered 3 months ago …
There is no vote of confidence as powerful as paying full price!
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