The Wall Street Journal reports this morning the surprising news that the U.S. Securities Exchange Commission is investigating Wall Street analysts who cover Apple over the possibility that 'channel checks,' routine checks with suppliers and manufacturers, constitute insider trading.
According to the paper, "Apple Inc., one of the hottest stocks of the past year, for which an entire industry of well-known and obscure analysts and "expert networks" scramble to report every detail of the company's undisclosed production plans.
The proliferation of such research raises questions about where prosecutors will draw the lines that define insider trading.
Where once insider-trading cases were built around a single tip about a merger, for example, prosecutors appear to be broadening into new territory. They are examining how arcane, confidential, but presumably routine data may move company stocks.
"Insider trading basically comes down to where you know or ought to know that the person from whom you're getting this information has a duty to someone else to keep it confidential," said former Securities and Exchange Commissioner Paul Atkins in a video interview with The Wall Street Journal. "If you go in and pay the mail clerk to give you special information, that's not proper.""
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