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socrateaser, Attorney
Category: Business Law
Satisfied Customers: 38901
Experience:  Retired (mostly)
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I had mistakenly purchased my own company stock put. But now

Customer Question

I had mistakenly purchased my own company stock put. But now that I realized its not allowed according to my company's insiders trading policies I am planning to square off the position tomorrow morning at the earliest.

Few metrics on the stock option.
Working State: California (H1-B visa)
Buy: $180 (08/28/2009)
Current: $230

1. Please let me know what would be the best option to get out of this?

2. Should I approach HR and let me them know I did it by mistake or should I be quiet about it as the amount is too small to get noticed?

3. Is HR obligated to report such activities to state/Fed if I were to confess to them?

4. What are the implications of the action from Fed/State laws and how vigorously do they monitor such activities?
Submitted: 7 years ago.
Category: Business Law
Expert:  socrateaser replied 7 years ago.

California Labor Code sec.s 96(k), 98.6, prohibits the termination of an employee for "lawful conduct occurring during nonworking hours away from the employer's premises."


Thus, unless you are inviolation of federal insider trading law (17 CFR sec. 240.10b5-1), then you may want to consider doing nothing and discussing the matter with no one else. Because it's none of your employer's business, regardless of its internal policies.


Note: an attorney for your employer represents the employer. So, by asking questions of that attorney, you have effectively sought the confidence of your adversary. Moreover, that attorney could be disbarred for not immediately notifying you that he/she cannot discuss the matter with you, because of the direct conflict of interest.


Hope this helps.


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Customer: replied 7 years ago.
Thanks for your response.
I did make the transaction during the working hours from my workplace.

My colleague talked to the Legal Director asking for advice in this type of situation. The Director is not aware of my involvement in this particular case.

With the above factors in mind is it advisable to just square off the stock option and not discuss it with anyone else?
Expert:  socrateaser replied 7 years ago.

I can't give you advice.


If it were me, I would just sell the stock and say nothing to anyone about it.

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