Business owners in California may be familiar with Vistaprint, one of the first companies offering a way to order and print customized promotional materials through the internet. When its parent company’s stock price increased during the final two quarters of 2014, a businessman who owned some shares sold them for a profit of $850,000. The SEC suspected insider trading and charged him with three counts of securities fraud, which the jury acquitted him of, as reported by The Advertising Specialty Institute.

The 48-year-old restaurant owner allegedly used his friendship with a former Vistaprint accounting manager to obtain confidential financial information about the company in advance of its public release. Prosecutors accused the businessman of using this information to predict how the stock’s movements would play out after the release of the company’s quarterly earnings. He purportedly had an unfair advantage that he leveraged to place profitable option trades ahead of the company’s earnings announcements. The prosecution claimed that he earned a large profit by trading on his friend’s inside information before it became publicly available.

The defense successfully argued intelligent trading

The defense argued that the businessman used information that had already become publicly available to place his trades. He was intelligent enough to make bold trades that enabled him to win at Wall Street without any help from insider information. The jury was unable to find enough evidence to convict him of the three insider trading charges and exonerated him. The jury, however, found him guilty of making a materially false statement when he told federal officials he was not a good friend of the husband of the former Vistaprint accountant.

Insider trading may be difficult to prove

With the growth of technology and the internet, information becomes available to the entire world in a matter of seconds. When a company releases its quarterly earnings results through its website and a professional public relations company, the law generally considers the information as already disseminated. Prosecutors may find it difficult to prove confidential information was used when an individual places trades after information about a company becomes publicly available on its website.