Out of curiosity, I wonder if it would be illegal for a journalist to falsely report a critical story about a company while buying short term puts to profit from the stock freefall. There are early stage biotech companies going through clinical trials where reporting failure could easily tank the stock 80% in a day.
While this is clearly ethically corrupt, this technically isn't insider trading since the journalist didn't have any insider info in the first place. Any thoughts?
No, it wouldn't be illegal as the journalist is purely speculating without any insider information. However, if the money involved in the trade is high and SEC's eyes fall on the trade - there is a possibility of an investigation but that would be rare.
While this is clearly ethically corrupt, this technically isn't insider trading since the journalist didn't have any insider info in the first place. Any thoughts?