SEC charges former Amazon finance manager and family with insider trading • Hacker News Board

Re: SEC charges former Amazon finance manager and family with insider trading

#41

Post by celticninja » Mon, Sep 28, 2020, 10:28 PM UTC

samfisher83 wrote: post #35

Topgamer7 wrote: post #7

1.4M in profits? Doesn't that seem like chump change? Like if you had insider information couldn't you buy options a make much more? Assuming your info was guaranteed to play out predictably. And if it wasn't is it really any better than general speculation?

Depends on what they initially put in. Lets say you made 1.4mil of 100k investment. That would be pretty good.

Seems like an $850k investment for a $640k profit. So good, but not go to gaol good. Especially when it's split 3 or 4 ways as it seems this would have been.

Re: SEC charges former Amazon finance manager and family with insider trading

#42

Post by ozten » Mon, Sep 28, 2020, 10:29 PM UTC

flak48 wrote: post #27

ozten wrote: post #21

How often is jail time included in these types of cases? If they merely lost their profits, this isn't much of a punishment.

The article mentions that they were asked to pay just under twice their profit (2 * $1.4 million)

I would not do this, because it is unethical. However, if there is a 5% chance you will get caught and lose 230% your profit margin, seems like a rational agent would do insider trading at every opportunity.

Re: SEC charges former Amazon finance manager and family with insider trading

#43

Post by IncRnd » Mon, Sep 28, 2020, 10:31 PM UTC

coliveira wrote: post #10

It is funny that high management is never considered to be doing illegal insider trading (except for obvious missteps), but they're the ones responsible for capital allocation, stock/option grants, and all kinds of decisions that will impact financial results in the next quarter.

This was just on HN the other day.

  Adam Rogas, who abruptly resigned from NS8 earlier this
  month, is accused of misleading investors who poured in
  $123 million to his company earlier this year, a deal in 
  which he allegedly pocketed more than $17 million.

CEO of Cyber Fraud Startup NS8 Arrested by FBI, Facing Fraud Charges - https://news.ycombinator.com/item?id=24518097

It wasn't insider trading, but it was financial fraud by a ceo.

Re: SEC charges former Amazon finance manager and family with insider trading

#44

Post by refurb » Mon, Sep 28, 2020, 10:31 PM UTC

quickthrowman wrote: post #5

curiousgal wrote: post #2

How did the SEC figure this out? Do they monitor the accounts of all financial employees' relatives?

Re: SEC, Brokerages ask if you’re related to an officer/director/10%+ owner of a publicly-traded company when you open an account. I don’t think they actively monitor these people, but they’ll be looked at if there’s unusual trading activity. Usually what happens in these cases is accounts with no/little activity suddenly have unusual options trading activity, like buying way OTM weekly calls that always profit. Thes…

I would assume it's exactly this. You just filter down trade to those accounts that have either never purchases options in the past, or brand new accounts where that's the first trade AND where the options were highly profitable.

Basically really unlikely investing scenarios.

Re: SEC charges former Amazon finance manager and family with insider trading

#45

Post by ponker » Mon, Sep 28, 2020, 10:32 PM UTC

timack wrote: post #33

bredren wrote: post #19

Earlier quoted context omitted.

People do really dumb things for relatively small amounts of money. Look up examples of corruption in US city administrators. You’ll see people who throw away their career over $30k.

Martha Stewart was jailed for avoiding a loss of ~$45k USD.

With a net worth of over $300 million.

Re: SEC charges former Amazon finance manager and family with insider trading

#46

Post by srtjstjsj » Mon, Sep 28, 2020, 10:32 PM UTC

huac wrote: post #37

Topgamer7 wrote: post #7

1.4M in profits? Doesn't that seem like chump change? Like if you had insider information couldn't you buy options a make much more? Assuming your info was guaranteed to play out predictably. And if it wasn't is it really any better than general speculation?

It is quite hard to profitably trade on earnings, even if you know what the financial results of a company will be. Try your own luck/skill in the Insider Trading Game: https://insider-trading-game.netlify.app/

That's quite different from an actual insider, not just a random with a tip.

Re: SEC charges former Amazon finance manager and family with insider trading

#47

Post by ponker » Mon, Sep 28, 2020, 10:33 PM UTC

jakupovic wrote: post #12

$1.4MM that's all they could eke out of it, pitiful performance.

The ones who eke out $1400m get museums named after them. The failure here is to make enough to buy an ownership interest in the law.

Re: SEC charges former Amazon finance manager and family with insider trading

#48

Post by celticninja » Mon, Sep 28, 2020, 10:33 PM UTC

notional wrote: post #23

mdoms wrote: post #11

Earlier quoted context omitted.

> Did anyone really need insider information to know Amazon stock was going to rise? Did you invest? Did everyone you know invest? Did you time it as well as the alleged offender?

Did I invest? Yes, my compensation was in part Amazon stock. Pretty much everyone I knew also invested. What is timing if you don't plan to sell short term? As far as I can tell, this charge is about buying not selling stock.

It's about buying it with insider knowledge that the quarterly earnings call would be positive and lead to a rise in price. So the intent is to sell that stock when you know the price has gone up to guarantee a return. The issue is the knowledge they used to make that decision was not public record.

Re: SEC charges former Amazon finance manager and family with insider trading

#49

Post by srtjstjsj » Mon, Sep 28, 2020, 10:34 PM UTC

samfisher83 wrote: post #35

Topgamer7 wrote: post #7

1.4M in profits? Doesn't that seem like chump change? Like if you had insider information couldn't you buy options a make much more? Assuming your info was guaranteed to play out predictably. And if it wasn't is it really any better than general speculation?

Depends on what they initially put in. Lets say you made 1.4mil of 100k investment. That would be pretty good.

That's not really how it works. Percentages only matter when you have other options that have similar return rates. 1.4M on 14M would be pretty good too.

Re: SEC charges former Amazon finance manager and family with insider trading

#50

Post by srtjstjsj » Mon, Sep 28, 2020, 10:35 PM UTC

ozten wrote: post #42

flak48 wrote: post #27

Earlier quoted context omitted.

The article mentions that they were asked to pay just under twice their profit (2 * $1.4 million)

I would not do this, because it is unethical. However, if there is a 5% chance you will get caught and lose 230% your profit margin, seems like a rational agent would do insider trading at every opportunity.

And they probably do, until they get caught.