Welcome to English as a Second Language podcast, number 860, Insider Trading.
This is English as a Second Language podcast, episode 860.
I'm your host, Dr Jeff McQuillan, coming to you from the Center for Educational Development in beautiful Los Angeles, California.
Our website is eslpod.com.
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This episode is a dialogue between Rita and Rick about buying and selling stocks.
Let's get started.
I just got a hot tip from my brother to buy stock in the Q Corp.
Your brother works for McHugh Corp., doesn't he?
Yeah, he's a director in the company, so he should know if something big is brewing.
If he's a director and he knows something that isn't publicly disclosed about the company and he's telling you to buy stock, isn't that insider trading?
Insider trading?
I'm not a major investor.
I don't plan to buy so many shares that I'll become a major shareholder.
All I can afford are a few shares.
Still, he'd be considered a corporate insider and may be breaching his fiduciary responsibilities.
Giving you this tip could get him and you into a lot of trouble.
Who are you, an SEC regulator?
People do this kind of thing all the time, and there's nothing shady about it.
If you're smart, you'd buy a few shares yourself.
Uh, no thanks.
I don't think I'd look good in an orange jumpsuit.
Rita begins by saying to Rick, I just got a hot tip from my brother to buy stock in McEucorp.
A tip, T-I-P, is advice, information that will help you.
A hot tip is typically a tip about some piece of information that's very timely, that you need to do something about right away.
This is often a term that we use when we're talking about secret information.
In this case, the information is about buying stock.
Stock is S-T-O-C-K is partial ownership in a company.
You can buy stock in what's called a stock market.
You could buy stock in a big company like Microsoft or Apple or any other of the large companies.
They all sell stock, and you can go and buy a little piece of that company.
Rita then has a hot tip about buying stock in McEw Corp.
Rick says, your brother works for McEw Corp, doesn't he?
Rita says, yeah, he's a director in the company.
A director is a member of the company's, the corporation's, board of directors.
This is a group of people, men and women, who make important decisions about the company.
All the most important decisions, including who to hire as the president.
They are made by the board of directors.
Rita's brother is on the board of directors of McEucorp.
Rita says he should know if something big is brewing.
The expression something big is brewing B-R-E-W-I-N-G means that something important is going to happen, but no one knows exactly what it is.
It's secret information.
Something big is brewing.
Rick says if he's a director and he knows something that isn't publicly disclosed about the company and he's telling you to buy stock, isn't that insider trading?
Rick is saying that if Rita's brother is on the board of directors of McHugh Corp and he knows something that isn't publicly disclosed, then there's a problem.
Publicly means that everyone knows about it.
Disclosed means that you tell someone.
So if you publicly disclose, D-I-S-C-L-O-S-E, information, you announce it to everyone.
You tell the newspaper.
You tell the television stations.
This is what's happening in my company.
In the United States there are very strict, very specific rules that you have to follow as a company.
You can't be buying and selling your stock based on information that you don't tell everyone else about.
That's exactly what is happening here.
Rita's brother is using his information that hasn't been publicly disclosed to tell his sister to buy stock.
That is what we call insider trading.
Trading refers to buying and selling stocks.
Insider, I-N-S-I-D-E-R, refers to someone who is inside of or part of a organization or a group, in this case, a corporation, a company.
Insider trading is when you take the information you have about your company or And you buy and sell stocks even though no one else knows that information.
That is against the law in the United States if the company is what is called publicly traded.
That is if anyone can go and buy and sell stock in that company.
Rita says insider trading.
I'm not a major investor. an investor i n v e s t o r is someone who invests, I-N-V-E-S-T.
To invest means to buy stock in a company or to buy something that you think will be worth more money in the future.
You could be a real estate investor.
You could buy buildings and houses hoping that the price goes up.
By the way, that doesn't always happen.
Rita says she's not a major investor.
Major, M-A-J-O-R, here means a very important one or a large investor.
She says, I don't plan to buy so many shares that I'll become a major shareholder.
Shares are what we call the individual units of stock.
A shareholder is someone who owns shares.
So shareholder here really means the same as stockholder someone who owns shares, who owns stock in a specific company.
Rita says, all I can afford...
All I have money for are a few shares, just a couple pieces of stock, if you will.
Rick says still, he'd be considered a corporate insider, he being Rita's brother, and may be breaching his fiduciary responsibilities.
We already talked about what an insider is.
Corporate, C-O-R-P-O-R-A-T-E, is something related to a corporation, a large company in this case.
So a corporate insider would simply be someone who works at a large company or a corporation.
Rick says that Rita's brother would be considered a corporate insider and may be possibly breaching his fiduciary responsibilities.
To breach B-R-E-A-C-H means to break or to violate or to do something wrong with regards to, in this case, responsibilities that you have.
If you're on the board of directors of a publicly traded corporation, you have fiduciary responsibilities.
Fiduciary, F-I-D-U-C-I-A-R-Y, involves...
So fiduciary is usually a term we use when we're talking about money and your responsibilities as someone who has information about a company or about an individual.
Rick says...
Giving you this tip could get him, Rita's brother, and you into a lot of trouble.
You could possibly be breaking the law here.
Rita says, who are you?
An SEC regulator?
SEC regulator? stands for the Securities and Exchange Commission.
This is the US government agency that is responsible for regulating, for making sure that people in the stock market are doing what they are supposed to are following the law.
A regulator...
R-E-G-U-L-A-T-O-R is a person who works in a government agency, a government organization that is responsible for going out and making sure people are following the rules.
In this case, the rules related to buying and selling stocks.
Rita says...
People do this kind of thing all the time, and there's nothing shady about it.
Shady, S-H-A-D-Y, means dishonest, not completely honest.
There's something that you're hiding.
There's something that you aren't supposed to do that you are doing.
That's the adjective shady.
We might say he's a shady character, meaning he's not an honest person.
He's not someone you should trust.
There's something strange about that person.
That's what people say about me.
Rita says if you're smart, you'd buy a few shares yourself.
So Rita says there's nothing wrong with this.
Rick says...
No thanks.
I don't think I'd look good in an orange jumpsuit.
A jumpsuit J-U-M-P-S-U-I-T is a piece of clothing that covers your entire body, from your shoes up to your neck, from your ankles to your neck.
You would perhaps see someone who works on automobiles.
A mechanic might be wearing a jumpsuit to protect his clothing underneath.
However, we also put prisoners, people who are in jail, people who have been arrested because they've broken the law in jumpsuits, and it's become common in recent years to put them in a very bright place colored jumpsuit so in case they escape they are easy to catch and the color that is often used is orange so when rick refers to an orange jumpsuit he's talking about someone who would be arrested he thinks that what rita is recommending is against the law and he doesn't want to go to jail Now let's listen to the dialogue, this time at a normal speed.
I just got a hot tip from my brother to buy stock in McEw Corp.
Your brother works for McEw Corp, doesn't he?
Yeah, he's a director in the company, so he should know if something big is brewing.
If he's a director and he knows something that isn't publicly disclosed about the company and he's telling you to buy stock, isn't that insider trading?
Insider trading?
I'm not a major investor.
I don't plan to buy so many shares that I'll become a major shareholder.
All I can afford are a few shares.
Still, he'd be considered a corporate insider and may be breaching his fiduciary responsibilities.
Giving you this tip could get him and you into a lot of trouble.
Who are you, an SEC regulator?
People do this kind of thing all the time, and there's nothing shady about it.
If you're smart, you'd buy a few shares yourself.
Uh, no thanks.
I don't think I'd look good in an orange jumpsuit.
There's nothing shady about our scriptwriter, I don't think.
That's the wonderful Dr. Lucy Say I'm talking about here.
Thank you, Lucy.
From Los Angeles, California, I'm Jeff McQuillan.
Thank you for listening.
Come back and listen to us again right here on ESL Podcast.
English as a Second Language podcast is written and produced by Dr Lucy Say, hosted by Dr Jeff McQuillan.
Copyright 2013 by the Center for Educational Development.
