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

#111

Post by vmception » Mon, Sep 28, 2020, 11:24 PM UTC

gavinray wrote: post #89

ununoctium87 wrote: post #83

Earlier quoted context omitted.

Options are non-linear and highly leveraged (usually 100:1)

And it has become clear to me now that I have dipped well out of my wheelhouse. Thanks for the attempt at explanation at least haha. (Though to me, this sounds like a monopoly-money game, really odd concept).

Options are awesome. When you are long options, you get massive leverage without the possibility of getting margin called while the price moves against you.

When you are short options you can take down the whole financial system with you.

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

#112

Post by refurb » Mon, Sep 28, 2020, 11:24 PM UTC

mc32 wrote: post #61

timack wrote: post #33

Earlier quoted context omitted.

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

I think she gets a bad rap. Obviously being wealthy makes her unsympathetic, but that's peanuts. And they 'got' he for 'lying' and not for securities fraud -among the original charges. But the thing is there are much bigger fish to fry --why not go after international investors who have sheel companies within shell companies, etc. But... I mean, I guess this is a career bump or bonus for someone doing investigations.

They do it “pour encourager les autres”.

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

#113

Post by filmgirlcw » Mon, Sep 28, 2020, 11:24 PM UTC

bargl wrote: post #102

vlovich123 wrote: post #93

Earlier quoted context omitted.

Reading the linked press release answers your question. > The SEC's complaint, filed in federal court in Seattle, charges all three Bohras with violating antifraud provisions of the federal securities laws. All three Bohras have consented to the entry of final judgments permanently enjoining them from further violations of the charged provisions, and ordering them to pay total disgorgement of $1,428,094, total prejud…

This is one of those situations where I read the article but not in its entirety and have to eat my words. I would have assumed an press release wouldn't use the word alleged unless this was an ongoing case.

I assume that’s because there is a parallel criminal charge against the husband by the US Attorney. I’m not a lawyer so I don’t know the intricacies around the language used in this kind of statement, but allegation or not, the defendants agreed to the judgment and that let them be clear of any future charges in this case by the SEC.

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

#114

Post by refurb » Mon, Sep 28, 2020, 11:27 PM UTC

jschwartzi wrote: post #88

renewiltord wrote: post #55

Earlier quoted context omitted.

Yeah, and it's weird but it turned out that Al Capone jeopardized his entire empire over just not paying taxes on $100k in income. Strange that despite his incredible business acumen he committed this one small crime.

The problem is that when you report the income the IRS wants to know where it came from. If you can't rightly say that's a red flag of its own. So you either admit(or strongly imply) that you run a criminal enterprise or you evade taxes. Hidden option 3 is buying a laundromat and a couple of video game arcades.

I’ve always heard the IRS doesn’t care where your income comes from, just that’s it’s reported. IRS website even talks about how to report “illegal income” and “bribes”.

And the IRS has no authority beyond tax collection. They can’t do a (non-tax) criminal investigation.

Now, could they flag it for the FBI? Sure.

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

#115

Post by dboreham » Mon, Sep 28, 2020, 11:28 PM UTC

ratata wrote: post #108

fnord77 wrote: post #79

Earlier quoted context omitted.

the search query would be TLS encrypted. Amazon snoopware wouldn't be able to see it

The query string is sent in plain-text in the URL parameters. https://www.google.com/search?q=AMZN

Which goes down a encrypted transport connection. The t in https.

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

#116

Post by shitlord » Mon, Sep 28, 2020, 11:35 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.

Amazon generally doesn't allow employees to purchase AMZN options.

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

#117

Post by boulos » Mon, Sep 28, 2020, 11:36 PM UTC

gavinray wrote: post #75

boulos wrote: post #32

From the complaint, it was OTM calls and puts, but it seemed like they were trying to decide how much to go in. > 42. Prior to the completion of Bohra’s initial review, her Husband had purchased 500 Amazon shares in put options in his account on January 8. These put options had an expiration date of February 16, 2018, and they represented his expectation that Amazon’s stock price would fall by that date. > 48. During…

> Bohra’s Husband and Bohra’s Father-in-Law had spent more than $850,000 on purchasing Amazon call options and common stock in order to trade > Amazon’s stock price increased 2.87% over the prior day’s closing price. > In total, accounts belonging to Bohra’s Husband, her Father-in-Law, and her 10 Mother-in-Law made a profit of approximately $664,000 Am I stupid? $850,000 * 1.0287 = $874,395, which is $24,395 profit.…

Also, even though you misunderstood the leverage of options, the complaint doesn’t tell us what kind of price they’d bought in at either.

That is, the stock went up 2.87% the day after the earnings, but they had purchased it over the weeks beforehand (but kept adjusting their bet, both in scale and price). So even in “regular stocks” of 1:1 leverage, the SEC telling us only that Amazon shares went up 3% that day doesn’t tell us how much it went up from when they purchased their securities. Amazon stock had moved quite a bit during January 2018.

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

#118

Post by boulos » Mon, Sep 28, 2020, 11:42 PM UTC

kens wrote: post #103

timack wrote: post #33

Earlier quoted context omitted.

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

One strange thing about the Martha Stewart incident is that she was a Wall Street stockbroker, from 1967 to 1972. Probably she should have known the rules, but I'm mentioning this because it strikes me as unexpected.

That was part of the argument at the time: you aren’t a confused person, you were a registered professional. Clearly, it was also “we would like to make an example of someone high profile to discourage insider trading”.

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

#119

Post by kosievdmerwe » Mon, Sep 28, 2020, 11:45 PM UTC

gavinray wrote: post #75

boulos wrote: post #32

From the complaint, it was OTM calls and puts, but it seemed like they were trying to decide how much to go in. > 42. Prior to the completion of Bohra’s initial review, her Husband had purchased 500 Amazon shares in put options in his account on January 8. These put options had an expiration date of February 16, 2018, and they represented his expectation that Amazon’s stock price would fall by that date. > 48. During…

> Bohra’s Husband and Bohra’s Father-in-Law had spent more than $850,000 on purchasing Amazon call options and common stock in order to trade > Amazon’s stock price increased 2.87% over the prior day’s closing price. > In total, accounts belonging to Bohra’s Husband, her Father-in-Law, and her 10 Mother-in-Law made a profit of approximately $664,000 Am I stupid? $850,000 * 1.0287 = $874,395, which is $24,395 profit.…

There are 2 kinds of options: calls and puts. Calls allow you the option to buy 100 of stock at a certain price any time before the option expires. Puts are the opposite, they allow you the option to sell 100 stocks for a certain price any time before they expire.

Note, that I said "option", you're not obliged to sell or buy stocks; however, if you let the option expire you lose the money you spent on the option.

I haven't bought options so I can't tell you exactly what the price of an option is relative to a share (some posters say 100:1), but it would have to be much less than the price of a share to be worth it. Since to make money from an option, the stock has to move enough to pay for the price of the option and if the option is too expensive, the stock price would have to move a lot.

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

#120

Post by dylan604 » Mon, Sep 28, 2020, 11:57 PM UTC

renewiltord wrote: post #55

timack wrote: post #33

Earlier quoted context omitted.

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

Yeah, and it's weird but it turned out that Al Capone jeopardized his entire empire over just not paying taxes on $100k in income. Strange that despite his incredible business acumen he committed this one small crime.

Except that was the one crime they could get him on. If that's the crime you have the evidence on, that's the crime you prosecute. Once he's in jail, he's in jail.