I wonder about this after a recent case that occurred here in Germany:
- A financial services company, listed on the stock exchanges, was accused, by an anonymous screed published on a web site the domain of which was registered through a privacy service just a week before, of various crimes (mainly money laundering), on a scale that would surely involve the CEO’s involvement.
- The share price dropped (by as much as 20% at a time). It was generally assumed that the perpetrators of (1.) were parties who had shorted the stock.
- The company denied the accusations as baseless.
- The company’s CEO took the opportunity to invest a considerable sum of his own money in the company’s stock (and this transaction was duly published as legally mandated). If and when the stock rebounds he stands to do very nicely out of it.
Now, assuming for the sake of this question
5. that the accusations were in fact baseless
6. that the CEO was not involved in short attack
what element of the rules for insider trading make his taking that long position not insider trading?
Public information (now): X Corp denies the accusations
Insider information: The above statement was sincere and will be confirmed by investigations.
Public information (much later): The above statement has been confirmed by investigation, so it seems to have been sincere.