IMO its mosaic. Seeing 1 patient who got sick from a restaurant is not material. Seeing 2 patients who got sick from the same restaurant is not material. But if you see it over and over, the mosaic gets built.
OK. Been thinking about this and looking at Securities and Exchange Commission v. Richard Bruce Moore, 13-cv-2514 (HB) (S.D.N.Y.), and it appears to me that the SEC would most likely not consider Mosaic Theory to apply where trading is based on information that is obatined through a breach of a relationship of trust and confidence. Which is to say they don’t seem to be looking at the materiality of particular information in misappropriation cases. Combine this with the Willis case and I think you may have a fairly colorable argument that a doctor piecing together patient information to trade on may be seen as a violation of 10b-5. I never speak in terms of certainty as the law is clearly fluid in this area, but it looks like this is where I would land.
Here is a good summary of the Moore Case from Bloomberg.
http://www.bna.com/the-secs-expansive-view-of-insider-trading/ :
The Moore case illustrates the limits of the “mosaic theory.” Under the mosaic theory investors can assemble many different pieces of information, which may include both publically available information and immaterial non-public information that may be confidential, into a mosaic that provides the investor with a material insight into a security that is not known to the market in general. The Moore case suggests that if all of the immaterial, non-public information in a mosaic was obtained as a result of a breach of duty, then the “mosaic theory” may not be available as a defense to insider trading.
Itera, don’t be a jerk.
***Nothing in the foregoing constitutes legal advice.***
there is no beach of trust here man. the doctor isn’t broadcasting anything confidential about patients here.
Violations of relationships of trust and confidence don’t require the violating party to broadcast anything, only to act on the information in a way that violates the confidentiality of the relationship. In fact, in most insider trading cases, you would generally expect the perpetrator not to tell others about the information he’s profiting on.
***Nothing in the foregoing constitutes legal advice.***
well I think what makes this not a breach of confidence is that the doctor inferred the causation from a trend he observed in a group of clients, none of the clients explicitly said she/he got sick from this chain. Unless all of the doctor’s clients explicitly told him they all got sick from this chain that might be a breach of confidence if you can someone group all of his clients into a single collective entity, but even in that case it might be a reach.
How else would the doctor know they all ate there if they didn’t explicitly tell him? The only way it would come up in their conversation would be if they were trying to diagnose the root cause.