Replies to post #393 on China Stocks

[Risicare]

I think the SPNGQ and CKMX folks could use your expertise LOL

[Koufax]

They are not trading on privileged information. They are trading on the results of their own, on-the-ground due diligence. It's perfectly legal.

[Rames]

Please define "privileged information" as you understand it...

"Trading on privileged information.
Putting out information with the attept to move the market.
Selling privileged information.
Putting out information that is claimed to be factual that is unverified."

Let's see... we know that trading on or selling insider information is illegal. Insider information can be defined as material, non-public information that has been obtained from inside the company (employees, officers, directors, etc.). That includes information that has been obtained indirectly from sources within the company.

I agree that putting out possibly new and market moving information as "factual" without substantial evidence to back it up is a grey area. Most reports are declared an "opinion", however not very determinedly. With most long reports there are short arguments that are usually omitted, and vice versa. The intention of the author is usually not in dispute. There is no independent and not-for-profit organization in the world of financial analysts that merely exists to make Wall Street a better place - they all have an agenda, usually a simple one: making money for themselves.

So what is "privileged information"? Surely you can't mean investigative journalism, that is one of the foundation pillars of a democracy. What about independent research, talking to suppliers, customers etc. in order to get a clearer picture of a company's operations? What about digging for public records, and non-public official records that are filed with authorities outside the company? What about private observations, any type of on-the-ground research which is usually done for only one purpose: obtaining additional information.

That type of research is usually costly, selling the information is common and I don't see how this can be illegal. There is a whole industry in the financial world that lives off such a business plan. Access to information is key for success on the markets, not just for retail investors but especially for large institutions, hedge funds, etc.