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curious_george
 
Posts: 1
Joined: March 20th, 2014, 5:11 pm
Hi ,

I am curious as to the legalities surrounding purchasing a client's stock. As an industrial designer - I am assisting in the development of a client's first product and (naturally) I have high hopes that the design will help them become a success.
The client in question is a public company so I am considering purchasing some stock.

I did some Google searching on the definition of what an insider is and found out that: "For purposes of insider trading, the definition is expanded to include anyone who trades a company's shares based on material non-public knowledge"
I'm not a securities lawyer... - but I would think a design firm working on a new product would constitute knowledge that is material and non-public.

Wondering if anyone has experience with this? I am sure I have heard of design firms in the past who have equity stakes in their clients.

Thanks...


iab
full self-realization
full self-realization
 
Posts: 2408
Joined: January 5th, 2004, 6:03 pm
Obviously a question for a lawyer. But I don't know of a single case of "insider trading" based on knowledge of new product development. The reason being, no one knows if a product will be a success or not. Insider knowledge is stuff like knowing your quarterly report is going to be down and will guarantee your stock price going down. There is no guarantee of any stock movement due to a product launch.

But if that isn’t the case, I am definitely “guilty” of insider trading as I have invested in my clients. But that has always been my investment strategy, I invest in companies with a history of innovation. I also know that the stock market acts like a frightened 7-year-old. So when Ford was at $2 in 2008, I bought. When Boing batteries were catching fire, I bought. I wish I invested in Apple when they introduced the itunes store. But I was an idiot and thought like everyone else, why would anyone pay for music when you have Napster?

In the late 90s, early 00s I did day trade one of our clients that was barely out of startup mode. It was really cool because their stock went up and down 20% every week. I have no idea why, but it certainly was not linked to any product launch I worked on. Again, I don’t think I was insider trading, but I am no lawyer.


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