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US law dictates that you cannot buy / sell shares in a company you work for except during open trading windows. I understand lockout periods when you're in a company but what about after you quit?

If I were to no longer work for a company can I buy it's stock without any insider trading issues (assuming I had no insider info)? Is there a given period of time that I need to wait? I'm asking for a general US based insider trading law.

Here is an example: what if I work for CocaCola and then quit. Can I buy coke shares the next day? (substitute any other company for Coke)

Please give a reference to the rules you find. I couldn't find any specific to once you leave a company only to things like stock options etc.

Dheer
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Tai
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3 Answers3

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US law dictates that you cannot buy / sell shares in a company you work for except during open trading windows. I understand lockout periods when you're in a company but what about after you quit?

There's no such law.

Trading lockouts are imposed by companies themselves to avoid the complexities of identifying "insiders". For large companies it sometimes is easier/cheaper to assume everyone is insider instead of imposing internal data flow controls and limitations.

For such companies, their internal policies would also manage how the employees who are leaving should be treated.

littleadv
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Insider trading is when you buy or sell an investment based on material, non-public information that gives you an unfair advantage over the rest of traders in that market.

Working for a company is one way that you might have such information, but whether it is insider trading is not contingent on you working there. You could use that information a long time after leaving the company. You don't even need to have worked there. If a friend/relative gave you non-public information because THEY work there, it is still insider trading.

JohnFx
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Not a lawyer, but read good advice that you should wait until a few days after the company issues its 10-Q for the period that you were last there. It allows the company to share its results publicly, which you might have had information about.

This assumes it's just general operational/financial results and not anything special, like upcoming M&A, product launches or other private strategies.

As others mentioned, insider trading isn't always clear, this is just to reduce any suspicion that you were up to anything, even if you weren't.

JoeTaxpayer
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Roger-123
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