Let's say you work for Apple, Inc as a middle class employee. This is a large publicly traded company. By the very nature of your employment there will be limited times that one can make purchases and sells of your Apple holdings, from my understanding so this is mostly an assumption. Likewise I'm assuming, based on the nature of the employment, that it would be nearly impossible to legally short sell shares of Apple, or may be deemed a conflict of interest.
Big companies often are weighted heavily in indexes and in ETFs that track indexes. Such as the SPDR Technology ETF or the Nasdaq. Although trading of a linked security on inside knowledge falls under the prohibition of insider trading, would normal hedging using these securities be prohibited under existing US law? I mean, even if it was prohibited under the securities act you could always sell Nasdaq futures instead - in this example - since those are not regulated under the securities act
Lets say Apple just so happens to be trading at all time highs and is weighted at 20% of a index. if Apple falls 10% then the index that holds Apple will fall about 2%.
Is there anything legal that would prohibit this?