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Insider trade on Splunk acquisition?

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Re: Insider trade on Splunk acquisition?

#81

Post by xyzelement »

vkou wrote: post #57
xyzelement wrote: post #17

I don't know if this is genuinely suspicious or not. Is buying 20K of options an unusual thing? Or is this something that happens regularly with options expiring worthless or with a small gain - and it just happened to hit big this time? IE "someone bought a lottery ticket and won" - interesting to know if they play the lottery every other day (and don't usually win?)

Buying 20k of options when there's a 99.99% chance of them being worth $0 is pretty unusual, unless you're actively regularly trading in the millions.

// unless you're actively regularly trading in the millions.

A lot of people/organizations bet in the millions.

Re: Insider trade on Splunk acquisition?

#82

Post by fsckboy »

0xB31B1B wrote: post #43
breakds wrote: post #38

Not defending anyone, just saying. - If I have $1000 I might choose to spend $2 for a gambling. - If the trader have $10M already, it might be reasonable for him/her to spend $20k gambling on some rumors. This guy could be someone who is already rich.

There is a 0% chance this is someone gambling. This is a 1000000 sigma event.

many people gamble in many options continuously all the time. did trades like this occur in the market for Splunk every day? did this trade significantly affect the price or volume in Splunk options? If it's part of a very common pattern of random trading, then the unusual thing is the acquisition, and not the trade.

And a suspicious trade itself is not enough evidence, there needs to be evidence of an inside information conduit to make the case.

I'm not take sides on the suspiciousness of the trade, I'm pointing out what the language of the evidence should look like to raise suspicion.

Re: Insider trade on Splunk acquisition?

#83

Post by dmoy »

bee_rider wrote: post #79
dmoy wrote: post #66

Earlier quoted context omitted.

If they obtained info about this through their role as a senator/congressperson, and not just through normal channels. If I understand it correctly: Insider trading off of classified or whatever info they get from their senate/congress job - not illegal (though imo it should be illegal). (Edit: as mandevil points out, strictly speaking illegal, but largely uneforceable/unenforced) Insider trading off of info they got…

Why don’t people track the investments of senators and congresspeople and race to follow them? It seems like an easy way to get nearly insider trading.

In 2013 the electronic disclosure part of the 2012 STOCK act was removed, so they can just disclose in some way you can't follow.

Re: Insider trade on Splunk acquisition?

#84

Post by itsoktocry »

lacoolj wrote: post #51

Let's assume this turns out to be insider trading. Can someone shed a little insight on why this is worthy of a prison sentence? To me, even if they used information they had and we didn't, I don't see who the "victim" of this crime would be. It truly sounds like a "but it's unfair" argument and I'd really like to know why I'm wrong here. Thanks in advance

>I don't see who the "victim" of this crime would be

The person that sold the options. They were offering cheap insurance for a very unlikely event.

Re: Insider trade on Splunk acquisition?

#86

Post by qwytw »

bee_rider wrote: post #79
dmoy wrote: post #66

Earlier quoted context omitted.

If they obtained info about this through their role as a senator/congressperson, and not just through normal channels. If I understand it correctly: Insider trading off of classified or whatever info they get from their senate/congress job - not illegal (though imo it should be illegal). (Edit: as mandevil points out, strictly speaking illegal, but largely uneforceable/unenforced) Insider trading off of info they got…

Why don’t people track the investments of senators and congresspeople and race to follow them? It seems like an easy way to get nearly insider trading.

Because:

> Trades executed by lawmakers or their families must be disclosed within 45 days of execution

Is probably an issue (it's it's actually insider trading).

People do track it, though:

https://www.capitoltrades.com/politicians

Re: Insider trade on Splunk acquisition?

#87

Post by mattnewton »

yellowstuff wrote: post #22
jldugger wrote: post #11

Earlier quoted context omitted.

Cisco and Splunk are both HQ'd in SF. If they were at the airport, it was coming back from Jackson hole or something. The real trouble with 'maybe they were legit outsiders' is the options expired specifically today, which means you need to know _when the announcement_ is to profit.

I strongly suspect these trades are not legit. That said, the trader didn't necessarily KNOW that the deal would be announced today. Trading is a game of probabilities. It's possible that the trader used public information to figure out that Splunk could be acquired soon and there was a small but non-zero chance it would be announced today. In that case taking a $22k flyer on cheap options is a good risk-adjusted bet…

Yeah, I don’t know, an investor sophisticated enough to predict that without insider information, I would have to hope that they would also be sophisticated enough to make the trade less blatantly obvious as a big bundle on 1 day expiration otm call options.

Re: Insider trade on Splunk acquisition?

#88

Post by ryanSrich »

Where's the line for insider trading on something like this? Say you were a low level Splunk or Cisco employee and you had a hunch the acquisition was going to close sometime this week (you're not working on the deal, you just heard through the grapevine that it's happening). Is that considered insider trading?

Re: Insider trade on Splunk acquisition?

#89

Post by simonw »

lacoolj wrote: post #51

Let's assume this turns out to be insider trading. Can someone shed a little insight on why this is worthy of a prison sentence? To me, even if they used information they had and we didn't, I don't see who the "victim" of this crime would be. It truly sounds like a "but it's unfair" argument and I'd really like to know why I'm wrong here. Thanks in advance

Think about what the US economy would look like if anyone could do this any time they wanted to.

Re: Insider trade on Splunk acquisition?

#90

Post by vkou »

xyzelement wrote: post #81
vkou wrote: post #57

Earlier quoted context omitted.

Buying 20k of options when there's a 99.99% chance of them being worth $0 is pretty unusual, unless you're actively regularly trading in the millions.

// unless you're actively regularly trading in the millions. A lot of people/organizations bet in the millions.

Sure, and the SEC investigation will probably figure out if this is one of a thousand daily trades that got placed by the beneficiary, or if he opened a trading account last week, and this is the first time he's buying options.
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