Part of being a top analyst or a top hedge fund trader is knowing every shred of public information about the stocks you trade. That is what gives you the ability to assess any new piece of information, weigh it against what is ‘priced into the market’ and make a trading call. Every analyst that knows their companies knows what they do and do not say. So when you come across a piece of ‘peculiarly granular’ information the only question is “is it legitimate inside information” or is this just a rumor. Smart analysts can quickly separate rumors. I’m sure Steinberg thinks he is the best at this, and he’s probably right.
The only difference between this con and a legitimate professional analyst is what they do with the information after they make that determination. One uses it to enrich themselves while the other protects that information in order to preserve their integrity and their profession. The success of Steinberg’s ‘defense’ that he did not know the information was ‘inside information’ will depend on how well/poorly the jury ‘learns’ about the real role of analysts and traders. There is not a shred of doubt that Steinberg ‘knew’ what had already been said about the quarter’s sales–that’s his job and he was great at it. And the speed that he reacted to the ‘new’ information shows how easy it was for him to determine that is was legitimate ‘inside information’. Ditto for Cohen. If they had doubt, they would have asked for more research.
Contrast this with the local store managers from Pizza Hut and Sears who have refused corporate to force their subordinates to work on Thanksgiving Day, you have to wonder if there may be something missing in a typical MBA curriculum. Or worse, it may be responsible for stripping away some basic human decency inherent in regular people.