Note - I have seen the other questions but they are still vague and explanations parsimonious.

Is it still considered insider trading if no benefit was exchanged or received from the information?

Say that I am a flight attendant on a private jet and I hear a bank CEO discussing a merger or a buyout. I proceed to purchase that stock before the announcement. The CEO did not tell me to buy it, I just overheard him.

The show Billions said that this was legal. Is that true?

  • I'm making an assumption based on some of your other activity on this site and adding the US country tag. If you have a different jurisdiction in mind for this question, please update it. Commented Jun 5, 2017 at 14:18

2 Answers 2


I am a flight attendant on a private jet and I hear a bank CEO discussing a merger or a buyout. I proceed to purchase that stock before the announcement. The CEO did not tell me to buy it, I just overheard him.

If you are a flight attendant on a private jet that is operated by one of the principals, probably including a bank, attorney, consultant, broker, etc., in the merger or buyout, then you probably have a fiduciary duty to safeguard the information and are prohibited from trading. Please see: http://www.kiplinger.com/article/investing/T052-C008-S001-would-you-be-guilty-of-insider-trading.html

You’re a janitor at a major company. You hear members of the company’s board convening outside the room you’re cleaning and decide to hide in the closet. The board okays a deal to sell the company for a fat premium to the current share price. You load up on the shares. Illegal insider trading?

Definitely. This is not a public place, and “you’d be in a position to understand that confidential information was being disclosed, which changes the calculus,” says Andrew Stoltmann, a Chicago-based securities lawyer.

Also see: http://meyersandheim.com/how-to-win-an-insider-trading-case/

However, between these two extremes of a bystander with no duty to the corporation and a corporate officer with a clear duty to the corporation stood a whole group of people such as printers, lawyers and others who were involved in non-public transactions that did not necessarily have a duty to the company whose securities they traded. To address this group of people the courts developed the misappropriation theory. The misappropriation theory covers people who posses inside information and who are prohibited from trading on such information because they owe a duty to a third party and not the corporation whose securities are traded.

Yours is the perfect example. You owe a duty to your employer to operate in its best interests.

As for the broader, more common example, where you overhear information in an elevator, restaurant, in line at the coffee shop, etc., trading on such information was found not to be insider trading in SEC v. Switzer: http://law.justia.com/cases/federal/district-courts/FSupp/590/756/2247092/

In this case, Mr. Switzer overheard information at a track meet and traded on it with profits. The court found:

  1. The information was inadvertently overheard by Switzer at the track meet.

  2. Rule 10b-5 does not bar trading on the basis of information inadvertently revealed by an insider.

On the basis of the above findings of fact and conclusions of law, the court orders judgment in favor of defendants.


Nope, its not legal.

Easy to explain: If you know something that isn't public known ("inside") it's called insider trading.

Hard to prove (impossible), but still illegal.

To clarify: If the CEO says it AND its known in public its not illegal. In any case the CEO could face consequences (at least from his company).

  • 2
    I disagree. Please see: scu.edu/ethics/focus-areas/business-ethics/resources/… *You accidentally overhear two business people at the next table discussing the fact that a company in which you hold stock is going to miss quarterly earnings. You then sell your stock. Commentary: This activity is actually not illegal. It is not illegal if you just happen to overhear someone say something. *
    – chili555
    Commented Jun 4, 2017 at 22:01
  • 1
    @chili555 In the example "... 2 business people ..." so you don't know who they were ... you keep hearing quite a bit but there is very little authenticity. If you know something for a fact while other don't and this can be established; then it would be insider trading.
    – Dheer
    Commented Jun 5, 2017 at 6:30
  • Unless you ask for their identification, you can never "know for a fact," which is not material in any event. If you have doubts, then don't trade.
    – chili555
    Commented Jun 5, 2017 at 13:29

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