Tippers and Tippees
According to the misappropriation theory, someone who receives a stock tip based on MNPI is also considered to be held to the same standards as someone who works for the company. Let's look more closely at stock tips and the difference between a tipper and a tippee.
Both Tippers and Tippees are Liable
Tipping Is Illegal, even if the tippee doesn’t make a trade on it
Anyone who has access to MNPI, and gives another individual a stock tip based on that information, is potentially committing a crime. Let’s talk about these types of individuals.
Tipper/tippee liability is enforceable even if the two parties do not know each other closely. It is always best to keep MNPI private, regardless of the situation.
A tippee is the person who receives a tip based on MNPI and makes an illicit trade based on the information received.
A tipper is someone who has access to MNPI and provides that information to an outside source who uses it to make an illicit trade.
What about Social Media Tips?
Receiving stock tips on social media is just fine as long as the tips are not based on MNPI.
Here are some myths to look out for:
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Do your due diligence and research
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Make sure the information is publicly available before trading
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This liability can include stock tips from online or social media sources
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