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Insider trade on Splunk acquisition?

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Re: Insider trade on Splunk acquisition?

#341

Post by BonoboIO »

sakex wrote: post #198

Let's say you live in front of the Splunk office, and you see tens of people in suits, a limo with a CISCO sticker, as well as a lot of commotion on the office in front of you. You strongly suspect something is happening, you buy $22k of Splunk calls. Is that insider trading?

Would I be able to see such a trade when the trader makes them and just copy the trade with a small amount.

Thinking is: „Who the hell would make such a trade if he doesn’t have some information, let’s do the same“

Re: Insider trade on Splunk acquisition?

#342

Post by BonoboIO »

say_it_as_it_is wrote: post #268

what we aren't seeing is trader/algo taking the same style of trade against dozens of other names, daily, for the last 12 months

Would I be able to see such a trade when the trader makes them and just copy the trade with a small amount.

Thinking is: „Who the hell would make such a trade if he doesn’t have some information, let’s do the same“

Re: Insider trade on Splunk acquisition?

#343

Post by eastdakota »

kevinmchugh wrote: post #286
eastdakota wrote: post #281

Earlier quoted context omitted.

Think the super unsatisfying answer is: ¯\_(ツ)_/¯ I think a lawyer would advise that that trade would come with a ton of risk. But the law isn’t clear. Generally, the SEC’s goal is to make sure markets are “fair.” What makes a market fair is hard to define. If you do a ton of work to launch satellites to fly over Walmart parking lots and then model the correlation of how full they are to what the company’s next earni…

So since you mention Wal-Mart. They have, probably, a better idea of Proctor&Gamble's quarterly sales than anybody but P&G, right? Like Walmart makes some massive double digit percentage of sales of p&g products, and knows about it possibly in real-time. If I was some data analyst at Walmart,I couldn't trade on that, that's misappropriation. But Walmart could potentially spin up a hedge fund and trade (against) their…

¯\_(ツ)_/¯

Re: Insider trade on Splunk acquisition?

#344

Post by jldugger »

wlonkly wrote: post #331
jldugger wrote: post #304

Earlier quoted context omitted.

> Say you're, like, an employee at DataDog, and you're involved in a long-term M&A discussion with Cisco that you know is competitive (I've had the pleasure of witnessing one of these at Arbor Networks). Things are looking great, you've picked up a bunch of strong signals that Cisco is definitely going to make a move, and then: the talks fall apart. I don't know about the law, but where I work insider trading policie…

In the hypothetical, though, Cisco is neither a vendor or a supplier to Datadog.

Good point, I somehow quoted that without fully reading it.

Re: Insider trade on Splunk acquisition?

#347

Post by kortilla »

kylecordes wrote: post #8
arcticbull wrote: post #4

Earlier quoted context omitted.

Knowing about the acquisition puts you in possession of material nonpublic information. It's unlawful to trade on the basis of such information whether you work at the company or not. Passing it along is 'tipping' and acting on it is still 'insider trading.'

I am far from an expert - but think this is essentially true - but does not universally imply you can't trade on the info. Example: You watch the front door of an office building. From seeing who walks in, you ascertain with 99% probability that companies X and Y are working on some kind of big deal. If you're just a random person with no relationship to those companies, you can trade on this information. (Not legal…

No, it’s essentially false. The crime is not trading on something the public doesn’t know. It’s breaching the trust for information given to you in confidence. It’s completely different despite looking similar on the outcome.

Re: Insider trade on Splunk acquisition?

#348

Post by kortilla »

fsckboy wrote: post #101
lolinder wrote: post #75

Earlier quoted context omitted.

> So, if someone did the same analysis that Cisco did they could have drawn the same conclusion. About the merger, but not about the exact date that it would be announced.

it's still the birthday paradox, 365 analysts deciding to make investments over the course of the year, some will pick the same dates, and assuming that there was not public information released recently that could have drawn an analyst's attention to Splunk or Cisco "being in the market for acquisitions" in the first place. Perhaps ChatGPT recommended this trade, "chatGPT, if i asked you to go spelunking for good op…

No, it’s not the birthday paradox. This was a bet that expired nearly immediately after it was placed. This wasn’t someone who decided “I’ll invest in splunk today”. It was “I’ll bet that splunk stock appreciates significantly by the end of the week, far outside it’s normal variance, else I lose everything I bet.”

Re: Insider trade on Splunk acquisition?

#349

Post by nurettin »

outworlder wrote: post #314
shortrounddev2 wrote: post #310

Earlier quoted context omitted.

I don't see how, but more importantly I don't see who this harms

> I don't see who this harms Every trade has a counterpart.

Except those calls just popped into existence in the exchange. So the first trader bought them ex-nihilo.

Re: Insider trade on Splunk acquisition?

#350

Post by eastdakota »

ghaff wrote: post #285
shortrounddev2 wrote: post #278

Earlier quoted context omitted.

What's unethical about it

You’re using confidential information obtained in the course of your work duties for personal gain. I’m pretty sure my employer would consider that a business conduct violation.

But that’s easy to solve for to get to the crux of the issue: what if you realized it and then, on behalf of and with the blessing of your employer traded on the information?
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