The normal way to pay a public-company CEO involves giving him mostly stock, so if he wants to lead a fancy lifestyle, he will eventually need to sell some of his company’s stock to fund it. And so if a CEO has a long history of sexual harassment, then he will also inevitably have a history of:
- Selling stock,
- While he knows about the harassment,
- And the shareholders don’t.
Is this insider trading? Is he trading while in possession of material nonpublic information about his own company, information that he has a duty to his shareholders to disclose (or else to abstain from trading)? I mean … yes, right? It is a little hard to see the argument the other way.[4] He knows some stuff, the shareholders do not, it’s about his job, it is clearly (in hindsight, anyway!) material to the stock price, boom, insider trading.
— Matt Levine