Tuesday, March 08, 2005

Inside Information

As I was driving to work yesterday, I was listening to the Business for Breakfast Show on Radio 1060 AM. During the Stock Talk segment of the show, one among us called the show to discuss Mesa Labs stock performance. To this person's credit, they did identify themselves as an affiliate of the company when asked by the host, which I am sure changed the nature of the conversation. It actually turned into a nice commercial for the company's stock, but it does give me cause to remind everyone that you must be very careful about insider trading rules.

Everyone is subject to the company's insider trading policy, but you are also subject to various securities laws concerning inside information. I don't want to see anyone at Mesa become the next Martha Stewart. Whether it is conversations with radio shows, your personal stock broker, ex-employees or friends if you have not seen information you know about the company in a press release from the company, you should not share it. Over my career, I have seen ex-employees here and at other companies call their friends within the company to get an idea of how things were going at the company. In one case, the ex-employee had taken a job as a stock broker and was in a position to pass that information on to clients (sound like a case you have heard in the news this past year?). In a second case, the information from these casual conversations was showing up on a chat board on the company. As I read other company's message boards on sites such as Yahoo, I will quite often see insiders talking about their own company. Again, I am quite familiar with a case where the folks using the chat board were charged with a felony.

If you are not familiar with these laws, you may want to do some research to become familiar. If you have not read the company's insider trading policy in a long time you might want to reread it once in a while to stay familiar. The best policy, however, is to simply avoid detailed conversations about the company's performance or plans. I would simply hate to see any of us break into jail and take an unexpected all expenses paid vacation.


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