I'm a financial trading luddite, so bear with me, but what happens when you do come across some private information that leads you to believe your stock will tumble? Grit your teeth and wait for the knowledge to go public before selling?
Please correct me if I am wrong, but I believe this depends on what your relationship to the company is. If you overhear the CEO talking to someone then you can sell if the CEO is talking to you then you can't. (Then again if you overhear something then it's more likely for you to get away with it so YMMV.)
You're wrong. It doesn't matter how you hear it - or what your relationship is. If it's material and non-public, you can't trade on it.
There were people who were hanging out at financial printers to find out material, non-public information, which they would then trade on. There's no relationship whatsoever there, but it's insider trading.
No, that's just harder to prove, but just as illegal. Given that, if you're in a position to overhear the CEO, you're probably already governed by a stricter set of rules than the guy on the bus.
Generally if you just "stumble" across confidential, non-public information without warning in advance (the way the CEO of Momma.com apparently told Cuban that he was going to tell him something confidential), someone has probably broken the law or breached a contract or something.
