I appreciate the discussion K. I don’t entirely disagree, but it really doesn’t change the issue. I believe he is an independent director, and I believe the transaction does not indicate that as an “insider” or not, whether in any other role, that his direct investment in the company is affected by his role as a director or holder of substantial shares. But agree otherwise. As I had indicated, he has disclosed his purchase directly from the company and he is not benefitted at all by his director role or share ownership against the seller of shares, which is the company, not some third-party in a market based “trade”.
It’s not a “trade” to buy shares from the company, it’s an actual investment. And while most retail buyers of shares believe they have directly invested, they have rather participated in a trade originally by someone who directly invested and then sold those shares. So it is third-parties trading shares for most retail investors rather than a direct investment.
Asymmetry in information is the key concept. It does not exist in this transaction. If he bought or sold shares as a TRADE, then someone would have been disadvantaged and that is the issue with regard to an insider, taking advantage of their informational asymmetry in a way that both harms the market and the other party, not an insider, to sell their shares or buy their shares. In this case, all buyers make their purchase on the same terms, set by the company.
In this case, it is the company selling shares for direct investment. The company is the ultimate “insider” with the asymmetrical information. The entire concept is not really relevant in this transaction except that he disclosed his transaction as a board member. In that context, I would agree, he is an “insider” but it is not relevant for the transaction beyond the disclosure. And I am comfortable with my expectation that the company would not sell in such a manner if it would limit the company’s options in any way or cause a board member to incur liability.
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