Oops, Yay! Nestor Inc Stock Shoots Up 1900 Percent on Google’s Acquisition of Nest
The stock symbol NEST belongs to Nestor Inc., a company that provides automated traffic enforcement systems and services to state and local governments in the U.S. and Canada. It's a penny stock, which might have played a role in over anxious investors looking to score a big payday on Google's acquisition of Nest Labs.
Stock traders who bought shares of NEST thought they were investing in Nest Labs, which Google recently acquired for $3.2 billion.
Another explanation as to why Nestor Inc.'s stock penny stock suddenly shot up 1,900 percent is that savvy investors and/or those with inside knowledge of the deal may have anticipated armchair traders mistaking the two companies. In relation to that, Bloomberg's Matt Levine brought up an interesting question on Twitter.
"If you had advance knowledge of the Google/Nest deal, would you buy some Nestor, Inc. shares? And would that be insider trading?," Levine posted to Twitter.
The short answer to his question is yes, based on the misappropriation theory which "outlaws trading on the basis on nonpublic information by a corporate 'outsider' in breach of a duty owed not to a trading party, but to the source of the information," according to a Supreme Court ruling in US vs O'Hagan. Nothing in the misappropriation theory says the information must be tied to the security you trade.
In any event, the lesson here is the same one you likely heard grade school teachers preach again and again -- "Pay attention, class."