Should this count as Insider trading?

Rapper 50 Cent owns a company called G-Unit which in turn owns 12.9% of a marketing company called H&H Imports. Despite the fact that it was at the time making a loss, it was plugged by 50 Cent on his twitter feed.

The shares were originally bought at 17 cents, and had dropped as low as 4 cents. After his twitter comments, the shares rose to nearly 50 cents due to the huge amount of trading in those shares.

The uprise in price meant his shares were now worth an extra $10 million.

More on the story here

So, should this count as insider trading given that it appears he has artifically inflated the share price through his comments, which has the possiblity to earn him a substantial amount of money?

Yeah, I think it seems a little shady. But on the other hand, don't people recommend stocks to their friends, like "It's cheap now and I really think it's going to take off?" I guess there's a difference when you're in a position to influence a lot of people, and thereby profit as a result as opposed to just giving a tip.

I wonder if they would have to prove that his intention WAS to profit, vs. to just give a tip, and that might be hard to do.

AIUI from the article he hasn't taken anything out of the business. IOW, he still owns the same number of shares, and doesn't seem to have any intent to reduce his exposure with that company.

(Sorry, I hate the idea that if your stock goes up, you've suddenly made money - you haven't made a cent until you sell said stock, and get your money out of it. Until that has happened you have something you may be able to trade for money, but selling off a chunk like that would also be information in the market - and cause the price to drop...)

Unless someone can show something more sinister than what has been shown here, I don't think this is insider trading. Though I'll admit promoting a stock without disclosing one's investment in the same stock is shady - I don't hold celebs to the same standards I'd hold a stockbroker to. I find it very easy to believe that the impropriety was done out of ignorance, not intent.

In twitter, did he disclose he owned a large amount of stock in the company?

Quote:

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He later deleted his original tweets and wrote: "I own HNHI stock. Thoughts on it are my opinion. Talk to financial adviser about it."

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Sounds like he may have bent the laws and probably out of ignorance of said laws. But Twitter is a strange new animal in most ways. I see this as no big deal.

Basically I agree with Loki on this. Celeb vs. Professional makes a huge difference to me.