This week’s question for The Ethicist:

I am a subspecialty physician without primary responsibility for patients. I consulted on the care of the C.E.O. of a major company, the seriousness of whose illness was not being fully disclosed to shareholders. I own stock in this company. Once I complete my consultation, may I ethically sell my shares, motivated by the information I gained as a doctor?

The Ethicist answers:

Medical ethics do not forbid this trade, but investor ethics - a curious phrase, given recent headlines - do, so you may not make this sale.
…
“The physician runs a very serious risk that his stock trade could be deemed illegal insider trading under what we call the ‘misappropriation’ theory,”… That is, material gained in a confidential relationship like that between a doctor and patient may not be used to trade stock.

Now I understand that insider trading gives an unfair advantage. But in this case, the doctor came across the information entirely by accident. If you work for a public corporation, you tacitly consent to the limit on your ability to freely buy and sell stocks. The doctor didn’t. What if somebody is on the hospital bed next to the CEO when such a conversation takes place. Is he also now bound by insider-trading regulations?

This also may not be a case of “material gained in a confidential relationship”. The doctor-patient relationship certainly is, but what if the information in question came out of an informal aside? I don’t mean to split hairs here but I think Cohen is doing exactly that.

The ethical claim against selling the stock seem dubious. Of course, if in fact it’s illegal, that’s a different story.