The insider trading laws are made up of a patchwork of judicial opinions that attempt to stretch a very vague statute (Section 10(b) of the 1934 Act) to reach most every type of trading on inside information. As a result, almost without exception, there are really no “repeatable” ways to legally trade and profit off of inside information.
However, every once in a while a scenario or idea arises that would seem to allow for what one might call “legal insider trading” on an ongoing basis. I’ve seen this twice in the past few years. The first instance of this was brought to us (coincidentally, given his recent re-emergence in the world of SEC enforcement) by Mark Cuban, who in 2006 created a publication called Sharesleuth.com. Cuban hired a business reporter to run the publication, conduct investigations to “identify suspect companies,” and then publish reports showing all of the damning evidence. Most notably, Sharesleuth told the world right up front that Cuban was going to make personal investments based upon the information discovered, and do so prior to the publication of this information on the website.
