Re: [Gnu-arch-users] a business model for free software

[Stephen J. Turnbull]

>>>>> "Robin" == Robin Green <address@hidden> writes:

    Robin> OT: I don't understand why paying employees (or anyone
    Robin> else) in stock isn't inevitably going to be insider
    Robin> trading.

Two reasons, one trivial and one not.  The trivial reason is that
typically stock payments come with no-trade restrictions for some
period, thus ensuring the desired alignment of interest and also
prohibiting insider trading as a consequence of prohibiting all
trading.

Second, "insider trading" as legally defined involves taking advantage
of "strategic news" which will clearly move stock prices.  Knowing
"inside information" such as trade secrets does not allow you to
predict price movements with accuracy.  I believe that there's some
requirement that the news be strategic (ie, under the firm's control),
as well.  So if you buy stock in your company because you and
coworkers discovered a process that makes duplicating automobiles as
easy as duplicating CDs, I don't think that's "insider trading".  You
don't know when such a thing will happen, and surely you're not going
to "undiscover it"---it's just a fact.  But if you wait until a week
before the product announcement, and then tell your mother to buy
stock, that's definitely insider trading, because the timing of the
announcement is under the firm's control.  (I'm not real happy with
this explanation, but I don't know how to make it more clear.)

IANAL, but I HTH.  Note that this in no way contradicts your main
point that insider trading is clearly a judgment call by the financial
regulators and the courts.


-- 
School of Systems and Information Engineering http://turnbull.sk.tsukuba.ac.jp
University of Tsukuba                    Tennodai 1-1-1 Tsukuba 305-8573 JAPAN
               Ask not how you can "do" free software business;
              ask what your business can "do for" free software.