Earlier quoted context omitted.
What about public disclosure of their stock holdings?
They are disclosed, but offline.
So can you do a FOIA? Or go to an office in DC?
Why Not Insider Trade on Every Company?
101–110 of 130 posts
Re: Why Not Insider Trade on Every Company?
#102Re: Why Not Insider Trade on Every Company?
#103Earlier quoted context omitted.
> Indeed, a slap on the wrist applied very rarely to those white collar criminals unfortunately politically unconnected to face punitive actions and another government initiative that also rarely applies any sort of punishment to the rich and connected. I don't believe this is even remotely accurate. > Meanwhile, on the other side of the tracks - snatched some swisher sweets? That's a shootin. Sass me while black? Th…
He's right though. Nearly a quarter of african americans in Florida are not allowed to vote - thanks in large part to the war on drugs, (well, and probably racism). Meanwhile, relatively very few people go to jail for insider trading. The number of cases in the past 10 years is probably in the hundreds, possibly thousands. Compared to hundreds of thousands of drug cases (maybe millions?).
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Re: Why Not Insider Trade on Every Company?
#104Earlier quoted context omitted.
Doesn't the STOCK Act ( https://en.wikipedia.org/wiki/STOCK_Act ) explicitly ban Congresspeople from insider trading? The only study on the performance on Congressional stock portfolios is from 2004 [1]. Do you know of any post-STOCK studies? [1]: Ziobrowski, A.J., Cheng, P.X., Boyd, J.W., and Ziobrowski, B.J. (2004) “Abnormal Returns from the Common Stock Investments of Members of the United States Senate.” Journal…
NOPE! "Congress Quickly And Quietly Rolls Back Insider Trading Rules For Itself" "It was such a national risk that Congress did the whole thing quietly, with no debate. The bill was introduced in the Senate on Thursday and quickly voted on late that night when no one was paying attention. Friday afternoon (the best time to sneak through news), the House picked it up by unanimous consent. The House ignored its own pro…
I already explained this in my reply to bsbechtel's comment (https://news.ycombinator.com/item?id=10045388). The amendment makes retrieving disclosure reports more difficult, but does not repeal the STOCK Act's explicit prohibition on insider trading by politicians.
Re: Why Not Insider Trade on Every Company?
#105Earlier quoted context omitted.
The main reason we don't like insider trading is that we like participation in the market by relative amateurs. A system that allows insider trading discourages participation by amateurs, because they do not have insider information. Insiders would earn money at the expense of these amateurs, so it's better for them to stick to other sorts of investments to avoid this "tax". This isn't necessarily a problem. As a soc…
> A system that allows insider trading discourages participation by amateurs, because they do not have insider information. Insiders would earn money at the expense of these amateurs How so? Can you flesh out the scenario a bit since I'm having trouble seeing how this is the case. To me, it seems like if there were no trade prohibitions on insider trading the share price would immediately reflect inside knowledge, th…
The share price likely wouldn't reflect insider knowledge. To see this, take an extreme example. The CEO owns less than 1% of most publicly traded companies. Even if he was allowed to sell his whole position without public disclosure, it wouldn't affect the stock price that much. Say he wakes up and finds out through insider knowledge that his company will go bankrupt tomorrow. He sells all his shares today. The stock drops a bit. It doesn't go to 0 just because he knows it should.
A stock price reflects a weighted average of individual investor's knowledge and their capital.
(Efficient market gets around this by assuming people are cool with not just selling the stock but shorting it all the way until it is as low as they think it should be. People don't tend to bet the farm (or have the ability to borrow funds to bet the farm) like that.)
Re: Why Not Insider Trade on Every Company?
#106Earlier quoted context omitted.
I'm pretty sure the key provisions of the STOCK Act were repealed the same weekend as the Boston Marathon Bombings. See the amendment section of the Wikipedia article you linked to.
The amendment makes it significantly more difficult to detect insider trading (since financial disclosure reports are not available online), but I wouldn't describe it as a repeal of the law's "key provisions". See http://www.npr.org/sections/itsallpolitics/2013/04/16/177496... : " Still, two major elements of the law remain. Insider trading is illegal, even for members of Congress and the executive branch. And for t…
> The amendment makes it significantly more difficult to detect insider trading (since financial disclosure reports are not available online)
That's only for staff. The reports for Congress members are still required to be available online. They are here [1].
Re: Why Not Insider Trade on Every Company?
#107Earlier quoted context omitted.
> A system that allows insider trading discourages participation by amateurs, because they do not have insider information. Insiders would earn money at the expense of these amateurs How so? Can you flesh out the scenario a bit since I'm having trouble seeing how this is the case. To me, it seems like if there were no trade prohibitions on insider trading the share price would immediately reflect inside knowledge, th…
The share price likely wouldn't reflect insider knowledge. To see this, take an extreme example. The CEO owns less than 1% of most publicly traded companies. Even if he was allowed to sell his whole position without public disclosure, it wouldn't affect the stock price that much. Say he wakes up and finds out through insider knowledge that his company will go bankrupt tomorrow. He sells all his shares today. The stoc…
But assuming that public disclosure was required for insiders, the CEO selling all their stock could drive the price down pretty quickly. People will be watching that particular 1% closely.
Re: Why Not Insider Trade on Every Company?
#108Earlier quoted context omitted.
What about public disclosure of their stock holdings?
They are disclosed, but offline.
what does offline mean here?
I agree that public disclosure of their trades is viable, because if they decide to trade based on information they have, the public (whom they _serve_!) should also get the same opportunity.
Re: Why Not Insider Trade on Every Company?
#109Perhaps someone will change my mind, but I see the block on insider trading and spoofing as harmful to the financial industry overall. Someone starts shorting a ton of Apple stock? That probably means something big is happen at Apple, and it's not good. It's information. Spoofing as a technique can be used to combat and inhibit other types of trading, and is in some sense an algorithm to 'keep the opponent honest'. A…
The main reason we don't like insider trading is that we like participation in the market by relative amateurs. A system that allows insider trading discourages participation by amateurs, because they do not have insider information. Insiders would earn money at the expense of these amateurs, so it's better for them to stick to other sorts of investments to avoid this "tax". This isn't necessarily a problem. As a soc…
>This isn't necessarily a problem. As a society, we've decided that we like having amateur capital in the markets more than we want the improved efficiency of allowing use of inside information. It's a tradeoff, and while both options have their merits, society has chosen one way.
I would imagine that information imbalance increases make a market less efficient, not more efficient.
Re: Why Not Insider Trade on Every Company?
#110It'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…
How were you able to acquire this source? Is there a public database of some sort?