an analyst at a hedge fund calls a trader and asks if he has seen any unusual activity in a particular stock. the trader knows that a person close to the company, but not an insider or executive, has been buying out of the money calls on the stock. the trader discloses this to the analyst without disclosing names or the amount of the trade . trader in violation?
I wouldn’t think so. The trades of the person are not likely material based on what you have given here. Frankly, there is no way to even determine if this information is valuable without more info. What was your gut feel?
the person is a former executive (analyst is not told this) and the amount of the trade is negligible relative to the size of this company and trading volume of the contracts. the analyst covers the stock for a hf and uses bits of info like this to come up w/ a gut feel on the quarter (along w/ fundamentals, ofcourse) . he, the analyst, knows the trade may mean nothing, but loves data points like this. my gut feel is that this is not a violation, but doesn’t feel that great either.
he’s not in violation b/c he only disclosed what you can see on yahoo finance. even if he gave the name and amounts he probably wouldn’t be in violation.
given your elaboration, it is definitely not a violation as he is not disadvantaging anyone involved (his employer, clients, etc). if the buy who bought the options wanted to be anonymous he could’ve requested to be so. it is his fault if other find out it was him and he is bothered by it.
thanks for the input guys. i just avoided the whole situation and didn’t even go there. why risk anything if you don’t have to?
unless you get PAID 
MattLikesAnalysis Wrote: ------------------------------------------------------- > given your elaboration, it is definitely not a > violation as he is not disadvantaging anyone > involved (his employer, clients, etc). if the buy > who bought the options wanted to be anonymous he > could’ve requested to be so. it is his fault if > other find out it was him and he is bothered by > it. Well, if the guy were a client of the trader’s firm, then he should have the presumption of full confidentiality, which the trader MUST respect. If the trader just “knew” about these trades without having a presumption of confidentiality to the executor, then he may be able to disclose.