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Let?s assume you are a businessman that plans an entry into a regulated market that was recently opened for a competition.You raise a lot of money, you get license, regulatory approval.You know that till now this market was de-facto a cartel.You plan to lower the prices significantly.One day before your company actually launches the product with super low prices, you personally short your competitors.Your company launches the super cheap product (on the border with dumping).The market is in turmoil.Competitors share plunge.You privately make a lot of money on a short position.Now the question: is that legal? What do you think?

QuoteOriginally posted by: giobilkisLet?s assume you are a businessman that plans an entry into a regulated market that was recently opened for a competition.You raise a lot of money, you get license, regulatory approval.You know that till now this market was de-facto a cartel.You plan to lower the prices significantly.One day before your company actually launches the product with super low prices, you personally short your competitors.Your company launches the super cheap product (on the border with dumping).The market is in turmoil.Competitors share plunge.You privately make a lot of money on a short position.Now the question: is that legal? What do you think?So the questions is: is this illegal even though it wouldn't literally be insider trading? I guess the answer strongly depends on whether or not it would be in the US. EDIT My feeling is that it wouldn't be illegal. The information gets public the moment the market is open and you get the license.

My gut instinct, based on what I've been told about EU regulations, is that it would be trading on non-public information and thus illegal. It would also potentially open you to the accusation of market manipulation, if someone made an argument that you (as CEO) pushed your product prices so low for personal gain on short positions (i.e. you'd have to prove that you'd set them so low even if you didn't haven't shorted your competitors). Disclaimer: IANAL (I am not a lawyer).

QuoteOriginally posted by: katastrofaMy gut instinct, based on what I've been told about EU regulations, is that it would be trading on non-public information and thus illegal. It would also potentially open you to the accusation of market manipulation, if someone made an argument that you (as CEO) pushed your product prices so low for personal gain on short positions (i.e. you'd have to prove that you'd set them so low even if you didn't haven't shorted your competitors). Disclaimer: IANAL (I am not a lawyer).Ah right, the price is the non-public info. Hence you'd be insider de facto. I agree.

essentially the same question was asked here.People there didn't seem to know the answer, which suggests to me that the SEC (in the US) has not acted on cases like this

QuoteOriginally posted by: ppauperessentially the same question was asked here.People there didn't seem to know the answer, which suggests to me that the SEC (in the US) has not acted on cases like this... which does not mean that it is not illegal, or that SEC wouldn't go after you if you tried that

QuoteOriginally posted by: katastrofaMy gut instinct, based on what I've been told about EU regulations, is that it would be trading on non-public information and thus illegal. It would also potentially open you to the accusation of market manipulation, if someone made an argument that you (as CEO) pushed your product prices so low for personal gain on short positions (i.e. you'd have to prove that you'd set them so low even if you didn't haven't shorted your competitors). Disclaimer: IANAL (I am not a lawyer).Indeed! Moreover, your shareholders might argue that you should be maximizing the value of your company (with somewhat higher prices) rather than minimizing the value of your competitor's shares.

Thank you, guys.It feels wrong on many levels: from discrimination of other shareholders, not acting in a good faith and up to a somewhat broadened definition of "insider trading".G

If you have to ask the question, then you probably shouldn't be doing it!