SI Posted November 18, 2015 Share Posted November 18, 2015 Looking for some of the expertise of this board. I have been offered a board seat on a corporate we have an ownership interest in. By we I mean: personally, for separately managed accounts and in our small mutual fund. I understand I would only be able to trade during the window and could not trade on material non-public but what if a SMA account client gets sick. We recently had a client come down with brain cancer and liquidate. Would this AUM setup prevent me from taking the seat? Any other thoughts on your opinion of cost/benefit would be appreciated. I obviously think the company is massively undervalued and I could have an impact. Link to comment Share on other sites More sharing options...
Parsad Posted November 18, 2015 Share Posted November 18, 2015 Essentially, you are correct in the way you laid it out and the repercussions. If you are privy to non-public, MATERIAL information from a board meeting or as a director through any correspondence/discussion, then you cannot trade that stock even in the SMA account. At any other time, when not dealing with material information or a blackout period, then you can trade as usual, but would have to file on each trade as an insider. Yes, you only have power of attorney over each of those SMA accounts, but you are also in a privileged position and there is a conflict of interest as a director and investment manager. The restrictions of a director should supercede your abilities as an investment manager. Cheers! Link to comment Share on other sites More sharing options...
SI Posted November 18, 2015 Author Share Posted November 18, 2015 Thanks Parsad but what if you are delinked on the account and it is not in your control in the case of a termination or someone getting sick. I was told you could file an amended 13G claiming as long as you could claim you did not have disposition authority. Any idea? Link to comment Share on other sites More sharing options...
stahleyp Posted November 18, 2015 Share Posted November 18, 2015 What's the name of your fund? Since you're on the board, I'm interested in possibly investing. Link to comment Share on other sites More sharing options...
stahleyp Posted November 19, 2015 Share Posted November 19, 2015 What's the name of your fund? Since you're on the board, I'm interested in possibly investing. Dude. talk to a lawyer. I mean the name of his mutual fund. And, after reading it again, I can see why it might be confusing, but I meant this forum - not the board of a company. Link to comment Share on other sites More sharing options...
Tim Eriksen Posted November 19, 2015 Share Posted November 19, 2015 Looking for some of the expertise of this board. I have been offered a board seat on a corporate we have an ownership interest in. By we I mean: personally, for separately managed accounts and in our small mutual fund. I understand I would only be able to trade during the window and could not trade on material non-public but what if a SMA account client gets sick. We recently had a client come down with brain cancer and liquidate. Would this AUM setup prevent me from taking the seat? Any other thoughts on your opinion of cost/benefit would be appreciated. I obviously think the company is massively undervalued and I could have an impact. Since I am on a board and manage money I will comment. You will gain great insight into the business, the quality of management, board dynamics, etc. that is overall very helpful for understanding not only that company but others as well. You will also be able to provide input that can help the business. The cons are the trade restrictions, the time involvement, and potentially frustration when things are not as you think they should. In the example you mentioned I would consider having someone else manage the liquidation. You may still have to file that the number of shares you potentially control declined due to "loss" of a client. Link to comment Share on other sites More sharing options...
Travis Wiedower Posted November 19, 2015 Share Posted November 19, 2015 Do actual insiders (directors, CEOs) kind of just get a pass on insider trading laws? I clearly know little about the actual laws, but it seems those individuals always have non-public information so basically all buys and sales would be insider trading. Link to comment Share on other sites More sharing options...
Tim Eriksen Posted November 19, 2015 Share Posted November 19, 2015 Do actual insiders (directors, CEOs) kind of just get a pass on insider trading laws? I clearly know little about the actual laws, but it seems those individuals always have non-public information so basically all buys and sales would be insider trading. No. That is why it is always referred to as material non public information. A director will have greater insight into the business than an investor, and a CEO has even more, but that alone is not insider trading. There is some grayness to it, since just knowing things are continuing as they have in the past is helpful, but that is not considered MNPI. Insiders can't do short term trades (holding periods of less than six months). Insider trading rules relate to trading on non-public information that an investor would consider important - a new product, loss of an account, lawsuits, etc. I am sure some lawyers monitor Form 4 filings to see if CEOs or directors violate blackout periods or do any trades before a major announcement. Link to comment Share on other sites More sharing options...
Travis Wiedower Posted November 19, 2015 Share Posted November 19, 2015 Thanks Tim. That makes sense, wasn't aware of the 6-month holding period requirements. Link to comment Share on other sites More sharing options...
SI Posted November 19, 2015 Author Share Posted November 19, 2015 That was really helpful Tim, thank you! Link to comment Share on other sites More sharing options...
SI Posted December 22, 2015 Author Share Posted December 22, 2015 Wasn't ducking the question, I just wanted to wait until it was public but it was as of this afternoon, the mutual fund is: HTAYX. Link to comment Share on other sites More sharing options...
ScottHall Posted December 22, 2015 Share Posted December 22, 2015 Congrats on the board appointment. PICO's an interesting one, though I've never owned it. Unless that's a total coincidence that a new board member was announced today. Link to comment Share on other sites More sharing options...
Scudbucket Posted December 23, 2015 Share Posted December 23, 2015 Definitely PICO. That company is getting interesting. Link to comment Share on other sites More sharing options...
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