Of course they can in the normal way, but what if, for example, Tom Cruise bought stock in a particular clothing brand before heavily endorsing it (with no other financial relationship with the company)
They have an insider information advantage, but but from outside the company, if you get what I mean. So would this be legal?
Posted Apr 12, 2011, 3:47 AM UTC
As far as it has been explained to me, if you are not a part of said company, any information you gather about said company is not deemed insider information.
I don't think that's true, otherwise insiders could funnel information to spouses or friends worry-free.
You are right; insider trading is not just buying and selling stock yourself based upon private company information, but also divulging that information to anyone outside the company.
That's not insider trading. If fact, many celebrities get stock in the company for endorsements as compensation. LeBron James just got partial ownership of Liverpool FC for compensation in endorsements. You have your definition of insider information wrong. Just because it's not public doesn't mean its material to affect finances to the point of being illegal.
Martha Stewart was once a celebrity.