When Fast traders get data from SEC upto a minute early is this insider trading?

Hedge funds and other investors using advanced internet technology can obtain documents ahead of “normal” internet users, sometimes a minute or more ahead, giving them a significant edge on the rest of the market. The question for business and legal scholars is why is this not insider trading?

According to The Wall Street Journal, the superfast, sophisticated trading firms, which set up direct lines to trade on stock are getting early delivery of corporate news releases from Business Wire, giving them just enough time to trade on the information before others do.

In addition these companies are getting documents faster through the SEC Edgar document distribution system

There is an academic paper soon to be published, written by Professor Robert Jackson of Columbia Law School which details the monetary advantages of the superfast trading firms which apparently shows that in 57% of the cases examined, the subscribers received the information before it was publicly available.

Insider trading on stocks is defined as the illegal practice of trading on the stock exchange to one’s own advantage through having access to confidential information. It could be argued that the information obtained was not confidential but until everyone has access, it really is.

Jeffrey Newman represents whistleblowers