This is a stretch of insider trading laws, which I assume is why they haven't been charged criminally (the SEC can only pursue civil sanctions). The data was in the possession of their employer, not of the publicly traded companies. They could probably be prosecuted under the CFAA for misusing a protected computer system, but I cannot imagine them being convicted criminally for insider trading here, or even losing at trial if they choose to fight the civil SEC case.
If I pay people to go count the number of customers in line at a representative sample of Chipotle restaurants during lunch every day, compare the results to the previous quarter where I was doing the same thing, and trade on that data, is that illegal? It's nonpublic information. Would my employees be prosecuted for this if they traded on it?
Prosecutors and the SEC attempt to stretch our laws every day. It doesn't mean that they are going to win these cases.
What if Chipotle signed an agreement with Visa and their credit card processor saying that their data wouldn't be provided to traders to trade their stock on?
What if Capital One signed an agreement with Visa saying that in exchange for issuing cards, they wouldn't provide the data to stock traders, and would keep it safe?
What if they didn't trade on it, just sold the info to Taco Bell?
Seems like a situations I want to avoid, if I'm Chipotle.
>What if Chipotle signed an agreement with Visa and their credit card processor saying that their data wouldn't be provided to traders to trade their stock on?
If they did, then obviously these two would be in violation. But I have seen no mention of such an agreement.
How is observing lines of Chipotle customers private information? Anyone can do it.
Anyone CANNOT query Capital One's transaction databases, which is the entire problem here. Make the transaction databases public (Bitcoin does) and open the casino to everyone else.
The point is that this wasn't private information, and it was not in a database that was the property of the target businesses. It didn't come from inside the company. Hence no "insider trading".
If I pay people to go count the number of customers in line at a representative sample of Chipotle restaurants during lunch every day, compare the results to the previous quarter where I was doing the same thing, and trade on that data, is that illegal? It's nonpublic information. Would my employees be prosecuted for this if they traded on it?
Prosecutors and the SEC attempt to stretch our laws every day. It doesn't mean that they are going to win these cases.