What is inside trading? Depends who you ask

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A new survey of financial industry insiders shows the divisions in the industry about what exactly constitutes insider trading.

TABB Group asked 112 financial industry employees about the government’s current probe of insider trading facilitated by so-called expert networks, which have been accused of providing non-public information to hedge funds and other big investors.

In one of the clearest signs of uncertainty among respondents, 59% said that stock analysts should be allowed to go to an outlet of a company they are following and ask about sales at the store. The other 41% said that doing so was unacceptable.

The survey found that 29% of those polled said it was unacceptable for an analyst to go to a store and ask about the sales of a specific product, while 71% said that would not be a problem.

A significant majority of the respondents said the rules are not clear enough on what analysts and experts should be allowed to collect and pass along to investors.

So far, most of the people arrested in the government’s current probe have been analysts and experts from public companies who are accused of passing along non-public information. Arrests of people on the other side of the transaction -- the investors -- are anticipated in the coming weeks.

The poll suggests that most industry insiders pin the blame for the current problems on the expert networks, rather than on the investors who go to these networks for information. In the poll, a majority said they believe that the government is unlikely to arrest many of these investors in the future.

-- Nathaniel Popper in New York