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Insider trade on Splunk acquisition?

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Re: Insider trade on Splunk acquisition?

#241

Post by tqi »

sakex wrote: post #226
ar_lan wrote: post #204

Earlier quoted context omitted.

Disclaimer: not financial advice I don't think so, it happened publicly, you weren't privvy to classified details. I would go for it if I were in that scenario.

If it's legal, it means that somebody could write a model that could predict mergers pretty accurately and make a lot of money. For instance, by tracking flight patterns of C-suites executives, scanning car brands in parkings next to offices using satellite images, and analysing working hours of the staff (this can be done in multiple ways like sending e-mails to check of automated OOO responses or analysing the ligh…

A version of this is already happening: https://www.theatlantic.com/magazine/archive/2019/05/stock-v...

Re: Insider trade on Splunk acquisition?

#242

Post by kasey_junk »

andylynch wrote: post #220
kasey_junk wrote: post #133

Earlier quoted context omitted.

The SEC has recently been pursuing very expansive insider trading definitions, and they are occasionally losing, so it’s very hard to say. But traditionally in the US insider trading is not about market fairness, it’s about not stealing from shareholders. So if you have no obligation to the company or it’s shareholders you aren’t an insider. The phrase is “breach of a fiduciary duty or other relationship of trust and…

Caveat that other jurisdictions do take a broader view (from memory, France is one that comes to mind where overhearing something confidential and trading on it is unlawful).

Yes! Very explicitly I mention the US because our insider trading laws are based on a different theory than European laws (for instance)

Re: Insider trade on Splunk acquisition?

#243

Post by [deleted] »

ada1981 wrote: post #169
qwytw wrote: post #86

Earlier quoted context omitted.

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

As in they need to announce them 45 days before they make them? Or 45 days after?

[deleted]

Re: Insider trade on Splunk acquisition?

#244

Post by compsciphd »

andylynch wrote: post #220
kasey_junk wrote: post #133

Earlier quoted context omitted.

The SEC has recently been pursuing very expansive insider trading definitions, and they are occasionally losing, so it’s very hard to say. But traditionally in the US insider trading is not about market fairness, it’s about not stealing from shareholders. So if you have no obligation to the company or it’s shareholders you aren’t an insider. The phrase is “breach of a fiduciary duty or other relationship of trust and…

Caveat that other jurisdictions do take a broader view (from memory, France is one that comes to mind where overhearing something confidential and trading on it is unlawful).

I believe the SEC went after capital one analysts who used information capital one has via credit card usages at stores to trade against companies not capital one. While one might say that the info that capital one had was proprietary (as they deffinitely use it for other things), its hard to view it ast hurting people one has a fiduciary duty to, but I believe they still won the conviction.

Re: Insider trade on Splunk acquisition?

#246

Post by drexlspivey »

thisisit wrote: post #208
matsemann wrote: post #119

Earlier quoted context omitted.

> And strategy 2 seems especially suspicious because the risk is so high and the non-illegal reasons for doing it are so few and far between. Very few reasons you’d buy a bunch of call options that only pay off if something causes a stock to move dramatically in 24 hours. But why are they then legal to sell? It almost seems like someone wants to be able to sell them, but when they lose the bet they want to revert it.…

The illegal part in this equation comes from the asymmetric nature of the bet. Not many sane people play naked way out of money options. 99% of the time it is a losing trade. It is like playing the lottery. Perfectly legal. But being suspicious when someone who doesn’t play lottery buys one and wins next day. While a hedged out of money option is commonplace. various payoffs you can create with options is mind boggli…

The “naked” doesn’t apply here, the guy just bought some options. Naked/covered refers to selling options.

Re: Insider trade on Splunk acquisition?

#247

Post by flangola7 »

sakex wrote: post #226
ar_lan wrote: post #204

Earlier quoted context omitted.

Disclaimer: not financial advice I don't think so, it happened publicly, you weren't privvy to classified details. I would go for it if I were in that scenario.

If it's legal, it means that somebody could write a model that could predict mergers pretty accurately and make a lot of money. For instance, by tracking flight patterns of C-suites executives, scanning car brands in parkings next to offices using satellite images, and analysing working hours of the staff (this can be done in multiple ways like sending e-mails to check of automated OOO responses or analysing the ligh…

This happens already.

Re: Insider trade on Splunk acquisition?

#248

Post by tootie »

mandevil wrote: post #63
mcast wrote: post #30

Earlier quoted context omitted.

Maybe unless that person was a US senator/congressperson.

This is false. Then-sitting Congressman Chris Collins (R-NY) pled guilty and was sentenced to 26 months in prison for insider-trading back in 2019-2020. He was pardoned by President Donald Trump as one of his last official acts as President, but Collins still spent 10 weeks in prison for insider-trading as a sitting congressman (this was for knowledge he gained outside of his duties as a congressman, it was knowledge…

And really, the stuff banned by the STOCK act is separate from insider trading which is why it needed a separate rule.

Re: Insider trade on Splunk acquisition?

#249

Post by wallawe »

paws wrote: post #157
thathndude wrote: post #58

Earlier quoted context omitted.

No explanation needed. You got it. An options contract gives you the right to buy or sell a security to a counterparty at a fixed price at any time on or before the expiration date. As you note, the chances of being able to buy a share from someone on or before Friday for $127 (when the stock was publicly trading below that) was near valueless ($.04). Not anymore!

Could you please explain more about who these counterparties are exactly? Do they include brokerages? I'm trying to understand why a counterparty would enter into an arrangement where a stock price change obligates them to financial liability like this. Presumably there's some upside if the stock price goes the other way, but it's unclear who the $ would come from in that case. Also: Who originates options? When some…

Let's say I own a bunch of SPLK and want to make some passive income. I am the counterparty to the call purchaser in this example.

I can sell call options 10% out of the money each week and make some nice cash. If my plan was to hold the stock long term, there's no downside risk because if the stock goes down, I get to keep the cash (premium) from selling the calls. If it goes sideways or slightly up I get to keep it as well.

The only "downside" is it goes up >10% in which case i've made that 10% + premium, but I've now had my stock taken away from me.

In this case, I lose out on an additional 10% in upside because it went up 20% overnight.

Re: Insider trade on Splunk acquisition?

#250

Post by ghaff »

paxys wrote: post #122
jkubicek wrote: post #6

Obviously I don't condone insider trading, but it's nice to see someone go all in and make some real money. If you're going to risk jail time, you might as well do it for life-changing amounts of cash. Contrast this with Stephen Buyer who's going to trial and may well end up in jail for a piddly few $100k.

On the contrary, to be a successful criminal you have to learn to stay under the radar. Yes millions might be available for the taking, but in doing so you will most certainly get caught. On the other hand no one will blink an eye at a trade that nets you a few hundred K, and that is still a significant amount of money.

And the one day thing. What would a more modest number of options one month or six months out have looked like. That falls well into the I had a feeling territory based on these things I read.
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