Did The Primary Global Employees Sued For Insider Trading Make The Classic "Bud Fox" Mistake?

A complaint filed today by the SEC alleges that some of Primary Global’s clients (hedge funds, other investors) had a special request about not talking directly to the consultants in PG’s network.

Some of its clients apparently requested that PG employees “funnel inside information” to them.

From the complaint (click here to download it):

Bob Nguyen and James Fleishman, and other PG employees acted as conduits in such conveyance of inside information.

This shows a classic misunderstanding of what officials consider inside information.

In the movie Wall Street, Bud Fox tells Gordon Gekko inside information he knows about Bluestar, the airline his father works for. 

Gekko asks Fox if he’s going to trade on the information himself. No, says Fox, because that would be illegal. What he doesn’t realise is that what he’s done already *is* illegal, because he’s given the information to Gekko.

The same misunderstanding applies, allegedly, to the PG clients who seem to have thought they would be safer if they only spoke to someone who had heard the inside information from someone *other* than the person it originated with.

Dumb mistake.

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