Insider trading and company blackout periods

MartialArtMan

So I'm looking to invest some money into the company I work for but was wondering what effect this has regarding insider trading and more specifically trading during a blackout period? 

MaxiRobriguez

Unless you're the CEO, not a lot.

Question is why you would want to though? Buying shares in the company you work for increases your concentration risk. If the company goes under then you lose your income stream and your investment tanks alongside. Most people tend to avoid investing in their own company for this reason, unless there is a clear benefit of doing so - which usually comes in the form of company share schemes that come with optionable purchases or discounted/free shares. 

MartialArtMan

I'm in a company share scheme (Long Term Incentive Plan). The company gives me shares which I can withdraw after 3 years (or a third each year), however I have to pay tax on those shares so I'm going to withdraw to a S&S ISA and reinvest into the company basically so that I can see exactly how much money I have. My intention is to reinvest the money I withdraw from the company back into the company, any other money I put into the ISA to invest will be invested diversely.
So during a company blackout I cannot cash in my shares through the company scheme but if I invest privately I can? 

bowlhead99

MartialArtMan said:

I'm in a company share scheme (Long Term Incentive Plan). The company gives me shares which I can withdraw after 3 years (or a third each year), however I have to pay tax on those shares so I'm going to withdraw to a S&S ISA and reinvest into the company basically so that I can see exactly how much money I have. My intention is to reinvest the money I withdraw from the company back into the company, any other money I put into the ISA to invest will be invested diversely.
So during a company blackout I cannot cash in my shares through the company scheme but if I invest privately I can? 

A 'blackout' ahead of results announcements or other unannounced news generally means employees (certainly senior management but anyone else who could have access to nonpublic information) are prohibited from any buying or selling of the stock during that time.

For example if they are going to announce the June financial report to the market at 7am next Friday, you must not buy or sell the company's shares before the market opens at 8am that day. It's quite possible that you know that x department has reduced or increased its sales or its costs, or gained or lost a major contract, or obtained financing etc, or you have simply seen the production lines slowing down or the loading bays empty of trucks; and the market doesn't know this until they finalise and release the results for the year or quarter with all the commentary on it.

If they are explicitly prohibiting you from cashing in your shares through the company scheme during this time, because they have implemented a blackout ahead of a scheduled news release, then I would expect you should not buy or sell shares privately at that time either.  Even if you are selling holdings, moving money and buying back the same quantity of holdings, they would not want people in managerial roles buying and selling shares in the market for whatever reason, as this can look very bad to an outsider even if it is innocent enough and you are only trying to maintain a position within a better tax wrapper rather than increase or decrease it.

If you are in any doubt over the company's policies or whether a blackout is supposed to apply to you, ask your employer.  It is feasible that some employees may not be on the official 'insider list' for a company although it is easier to enforce a policy by applying it to everyone (i.e. to the employees as a group).

 As an aside, even if there is no official blackout you shouldn't trade shares if you hold "information that is not yet publicly known and which would affect the price of the securities if it were made public"; as that would meet the definition of trading with insider information, whether you are buying or selling or both. That law isn't something you can ignore just because you do the trade 'in private' rather than using the company broker service.