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Crow

Shorting the Company That I Work for

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Is there anything illegal or that could get me fired for taking a short position against the company that I work for assuming that the decision to short was not based on insider information? There are legitimate reasons to do this, for example, many companies grant options and restricted stock units that take a long time to vest. If I feel that I have hit a good price, but have to wait a while until I can sell my unvested stock, shorting the stock to lock in the current price would make sense.

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I am no expert on this, but I think you are missing the point of the restrictions on selling the stock. This is a murky area that could lead to dismissals, unlikely much more than this unless you are a key decision maker in the firm. Best check your employment contracts and seek proper legal advice.

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You are describing something more of a hedge. I have done this for clients a while back and used options instead of shorting the stock. It was a cheaper alternative to putting up the margin on a $4 million dollar position. There is nothing wrong with trading in and out of the stock if the company allows you to take positions. Some companies want you to disclose all positions that you hold to make certain that there isn't a conflict of interest with some of the companies that they do business with.

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There is no conflict of interest as I am a software engineer and work for a large tech company. I don't have to disclose any of my positions. But I assume that the SEC is always watching for insider trading even though my position would be purely as a hedge.

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Is there anything illegal or that could get me fired for taking a short position against the company that I work for assuming that the decision to short was not based on insider information? There are legitimate reasons to do this, for example, many companies grant options and restricted stock units that take a long time to vest. If I feel that I have hit a good price, but have to wait a while until I can sell my unvested stock, shorting the stock to lock in the current price would make sense.

 

Hi Crow

I'm confused (that will make mitsubishi smile)

You sell the stock short to buy it back cheaper. What happens if the stock goes up?

If you dont think it will go up, you know something.

And when the company discovers your disloyalty, you are dead meat.

regards

bobc

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You are describing something more of a hedge. I have done this for clients a while back and used options instead of shorting the stock. It was a cheaper alternative to putting up the margin on a $4 million dollar position. There is nothing wrong with trading in and out of the stock if the company allows you to take positions. Some companies want you to disclose all positions that you hold to make certain that there isn't a conflict of interest with some of the companies that they do business with.

 

What about using single stock futures?

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Is there anything illegal or that could get me fired for taking a short position against the company that I work for assuming that the decision to short was not based on insider information? There are legitimate reasons to do this, for example, many companies grant options and restricted stock units that take a long time to vest. If I feel that I have hit a good price, but have to wait a while until I can sell my unvested stock, shorting the stock to lock in the current price would make sense.

 

You can contact the SEC directly:

 

https://tts.sec.gov/oiea/QuestionsAndComments.html

 

You "feel" that the stock has hit a good price. I would define exactly why you think the stock has hit a good price and document it. Is it because of the economy in general? The industry? Or do you think your company has no more upside? If you have no faith in more upside potential to your company, there must be a reason. Where does the reason come from? Your knowledge of the company, or your knowledge of the industry because you work for a company in the industry?

 

These are the things I would be trying to answer. Personally, I'd want to be able to provide an answer other than I just "felt" the stock price had hit a good price.

 

The company is providing the opportunity for employees to own stock as an incentive to do good work. That's the intent. You do a good job for the company, the company does well, the stock price goes up, you benefit. It's seems that what you are saying, is that the upside to the benefit is in question. Have you lost trust in the company, or the economy in general?

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There is no conflict of interest as I am a software engineer and work for a large tech company. I don't have to disclose any of my positions. But I assume that the SEC is always watching for insider trading even though my position would be purely as a hedge.
Depending on the timing, I would think.

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Hello,

 

I'm afraid that I know nothing of the legalities of your question.

 

However, one possibility might be if you were able to find another company's stock in the same sector that behaves in an almost identical fashion (ie it is 'highly correlated'), and can be expected to continue doing so in the future. You could then short this stock, rather than short your company's own stock. Even a sector ETF might exhibit a sufficiently high degree of correlation. Hell, if you're working for Apple then you could probably just short the NASDAQ . . .

 

The danger with this tactic is obviously that the instrument you short and the stock price of your company cease to move together - for instance if some news or event were to affect one without affecting the other.

 

Hope that's of some use.

 

BlueHorseshoe

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Is there anything illegal or that could get me fired for taking a short position against the company that I work for assuming that the decision to short was not based on insider information? There are legitimate reasons to do this, for example, many companies grant options and restricted stock units that take a long time to vest. If I feel that I have hit a good price, but have to wait a while until I can sell my unvested stock, shorting the stock to lock in the current price would make sense.

 

I dont think anyone was interested in this post.

 

 

I also do not think that you have enough money to risk a position of any size.

 

 

#foodstamps

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