Impeachment: Legal Standards & Political Decisions

This is a column about impeachment, but first, a confession: I think I might be guilty of insider trading.

At this point, I would like to assure my dear friends at the SEC that I do not mean this in any actionable legal sense, but only in principle. Some time ago, I was considering making an investment in a company — not a very large one, as such things go, but a very big deal to me. I called a friend to ask his advice, knowing that he had some knowledge of the firm in question. As it turns out, he had a great deal of knowledge: His company had previously considered a substantial deal with the firm and, in the course of doing its due diligence, had concluded that the business was not financially sound. This was not publicly available information. Again, this transaction was not something that would have been covered by the SEC, but as a matter of ethical principle, it is worth considering. People have been charged with insider trading both for buying and for selling stock, and declining to sell stock can bring up insider-trading issues, too: For example, corporate insiders whose personal wealth is made up largely of company stock (e.g., in the case of founders of companies that later have gone public) often set up schedules of regular stock sales in order to diversify their personal holdings, and changing such an arrangement in response to inside information might run afoul of the legal rules. Of course, it would be difficult to charge somebody for not making an investment, but that is more of a practical matter than an ethical one: The principle — that one should not receive financial advantage (the avoidance of loss is a kind of profit) derived from the benefit of privileged information — is the same.

About the Author

Kevin D. Williamson

Kevin D. Williamson is a former fellow at National Review Institute and a former roving correspondent for National Review.

This is a column about impeachment, but first, a confession: I think I might be guilty of insider trading.

At this point, I would like to assure my dear friends at the SEC that I do not mean this in any actionable legal sense, but only in principle. Some time ago, I was considering making an investment in a company — not a very large one, as such things go, but a very big deal to me. I called a friend to ask his advice, knowing that he had some knowledge of the firm in question. As it turns out, he had a great deal of knowledge: His company had previously considered a substantial deal with the firm and, in the course of doing its due diligence, had concluded that the business was not financially sound. This was not publicly available information. Again, this transaction was not something that would have been covered by the SEC, but as a matter of ethical principle, it is worth considering. People have been charged with insider trading both for buying and for selling stock, and declining to sell stock can bring up insider-trading issues, too: For example, corporate insiders whose personal wealth is made up largely of company stock (e.g., in the case of founders of companies that later have gone public) often set up schedules of regular stock sales in order to diversify their personal holdings, and changing such an arrangement in response to inside information might run afoul of the legal rules. Of course, it would be difficult to charge somebody for not making an investment, but that is more of a practical matter than an ethical one: The principle — that one should not receive financial advantage (the avoidance of loss is a kind of profit) derived from the benefit of privileged information — is the same.