If LeBron James bought MSG stock for six months and then signed with the Knicks would that be insider trading?

If Lebron James purchases MSG stock then signs with the New York Knicks, this would not be a violation of insider trading. After assessing the facts it will be easy to see that Lebron James shouldn't fall under insider trading guidelines for two major reasons: 1. Lebron James is not acting on behalf of a company/entity.2.

Lebron James choice of destination for an NBA career doesn't constitute non-public information. Let me first start off by saying Lebron James is not a company. He is an individual, a very influential and powerful individual as it is.

I feel the first reason is significant in order to determine whether or not this would be illegal insider trading. The definition of "insider" requires the individual to be part of a company/corporation. Technically after July 1st, Lebron James will be associated with no company nor franchise as an unrestricted free agency.So technically he will be representing no one and will be an agent of no company.

Lebron James as an individual does not fall under SEC guidelines. SEC regulation FD ("Fair Disclosure") requires that if a company intentionally discloses material non-public information to one person, it must simultaneously disclose that information to the public at large.In this scenario, Lebron is not receiving materials from another party. Simply there is no corporation acting which nullifies the entire concept of insider trading.

At worst this would be considered unethical, not illegal. But let's develop this argument a little further when we get into the second reason of privy information. Is Lebron's decision considered to be non-public information disseminated to only a select few in a company?

The answer is a simple no. Lebron is going to make his own decision for his career. Once again this is an individual acting, not a company.

Next there is no dissemination of information between multiple parties. Lebron James is the sole actor and any information he acts on is information he received by himself and not through communication. If there is no third party in this scenario, there is no illegal inside violations.

This is an important concept to understand. We can all argue that he is no ordinary man and that in fact his value is much greater than most companies but this doesn't dilute the fact that there is no exchange of information. If he isn't making legal violations there is no reason to take actions against him.

When we take all that into consideration it is easy to see that Lebron James would not be taking part in insider trading if he purchases MSG stock and then signed with the Knicks for two major reasons. First Lebron James is not a company, he is an individual. Secondly there is no information that is privy or non public being disseminated to third parties.

BUT HERE IS THE KICKER...it doesn't even matter because Lebron James would never be allowed to purchase MSG stock if he plays for the Knicks.It is against NBA League Rules and the Collective Bargaining Agreement that an active player may not own stock of a corporation which owns his team. This rule was created so teams that were owned by publicly traded companies would not have an unfair advantage to issue stock to free agents or provide greater incentive to join their team. So it seems this will be a non issue in the future.

Sorry if my analysis is a little choppy. I still wanted to address the question and go into some basic legal theory because this can easily be an issue in the future. Hope this was of some help and would love to hear feedback.P.S. how do I get an internship working for you?

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