Why Not Insider Trade on Every Company?
bloombergview.com
Why Not Insider Trade on Every Company?
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Re: Why Not Insider Trade on Every Company?
#2The tone of this article was really, like, interrupted by a prolific use of "likes."
I wish it were so simple to hand-wave all security risks. Mr. Levine's ability to find a MySQL tutorial was quite impressive, but his dismissal of very real security concerns is childish. It's like saying cars are known to crash, so quit crashing cars. It's so, like, simple!
Re: Why Not Insider Trade on Every Company?
#3The tone of this article was really, like, interrupted by a prolific use of "likes." I wish it were so simple to hand-wave all security risks. Mr. Levine's ability to find a MySQL tutorial was quite impressive, but his dismissal of very real security concerns is childish. It's like saying cars are known to crash, so quit crashing cars. It's so, like, simple!
I think you got distracted from the point by all the likes. Granted, they make it easy to get distracted.
The thrust of the article seems to be that it was the people in charge of these myriad wire systems who were disregarding the security risks, demonstrably to their detriment. As he states:
"But I feel like part of it has to be that the people in charge of those databases, like me until today, had a disenchanted view of the financial world. These systems didn't hold the nuclear launch codes. They held press releases -- documents that, by definition, would be released publicly within a few days at most. Speed, convenience and reliability were what mattered, not top-notch security."
... which is essentially the refrain for every major, embarassing security breach: speed, convenience, and reliability trump security concerns.
We have year after year of examples of innocuous systems being compromised to form elaborate weapons (at a seemingly increasing rate year-over-year), but security is still not a maximum priority. And the reasons are as Levine notes: speed, convenience, and reliability over security.
Re: Why Not Insider Trade on Every Company?
#4The tone of this article was really, like, interrupted by a prolific use of "likes." I wish it were so simple to hand-wave all security risks. Mr. Levine's ability to find a MySQL tutorial was quite impressive, but his dismissal of very real security concerns is childish. It's like saying cars are known to crash, so quit crashing cars. It's so, like, simple!
I love reading Matt Levine's writing; I enjoy the humorous tone. A bit of Louis CK for the financial world. But I didn't get that he was dismissing the security concerns. I read it as he was dismissing the idea that some aspects of the hacking could have been more easily thwarted. For example, two factor authentication is a relatively straightforward protection. Now he may have been underselling how complex it is to implement, but I would have to agree that items like two factor authentication are relatively straight forward tools at this point.
Re: Why Not Insider Trade on Every Company?
#5It's actually still possible to perform a specific type of legal insider trading.
Example: you are an executive at E Corp and the company will announce its acquisition in two months. You had previously set up planned trades to sell x number of shares each month before then. Because the acquisition is at a premium on the current price, you will make much less money if you go forward with your trades before the announcement. So, what do you do? You cancel the trades.
Was this insider trading according to the SEC? Surprisingly, no! Even though you're profiting from insider information, the SEC rules are such that for insider trading to occur, you actually need a trade.
https://en.wikipedia.org/wiki/SEC_Rule_10b5-1#A_possible_loo...
Martha Stewart did exactly this before her company was acquired earlier this year:
Re: Why Not Insider Trade on Every Company?
#6I think I will end up upvoting every share of this Bloomberg View columnist's columns here on Hacker News. The author, Matt Levine, thinks like a hacker in the best sense, by pushing ideas to their extremes and seeing what the consequences might be. He adopts a humorous tone, but his columns are full of food for thought.
Re: Why Not Insider Trade on Every Company?
#7It's actually still possible to perform a specific type of legal insider trading. Example: you are an executive at E Corp and the company will announce its acquisition in two months. You had previously set up planned trades to sell x number of shares each month before then. Because the acquisition is at a premium on the current price, you will make much less money if you go forward with your trades before the announc…
Are planned trades by insiders public information? Or are they only made public when the actual trade occurs?
Re: Why Not Insider Trade on Every Company?
#8It's actually still possible to perform a specific type of legal insider trading. Example: you are an executive at E Corp and the company will announce its acquisition in two months. You had previously set up planned trades to sell x number of shares each month before then. Because the acquisition is at a premium on the current price, you will make much less money if you go forward with your trades before the announc…
That seems a bit of a stretch to call that insider trading.
Re: Why Not Insider Trade on Every Company?
#9It's actually still possible to perform a specific type of legal insider trading. Example: you are an executive at E Corp and the company will announce its acquisition in two months. You had previously set up planned trades to sell x number of shares each month before then. Because the acquisition is at a premium on the current price, you will make much less money if you go forward with your trades before the announc…
Are planned trades by insiders public information? Or are they only made public when the actual trade occurs?
Only made public some time after the trade occurs.
Re: Why Not Insider Trade on Every Company?
#10It's actually still possible to perform a specific type of legal insider trading. Example: you are an executive at E Corp and the company will announce its acquisition in two months. You had previously set up planned trades to sell x number of shares each month before then. Because the acquisition is at a premium on the current price, you will make much less money if you go forward with your trades before the announc…
That seems a bit of a stretch to call that insider trading.
Why? It's effectively the same action as placing a new order. Cancellations are, for instance, how lots of market makers alter their prices in reaction to events.