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Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

bloomberg.com

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Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#101

Post by timack »

ptero wrote: post #91
mathattack wrote: post #79

Earlier quoted context omitted.

From the article: Regulatory filings show that three days later, Chief Financial Officer John Gamble sold shares worth $946,374 and Joseph Loughran, president of U.S. information solutions, exercised options to dispose of stock worth $584,099. Rodolfo Ploder, president of workforce solutions, sold $250,458 of stock on Aug. 2. None of the filings lists the transactions as being part of 10b5-1 scheduled trading plans.…

Actually it is the state that has to prove mischief. They still enjoy presumption of innocence. I agree the timing is suspicious, but the amounts are pretty small. Even if the stock drops 20% long term due to this (which IMO is highly unlikely), a high ranking executive risking a jail term to avoid losing 50k of stock is (again IMO), absolutely irrational.

Martha Stewart's insider trading saved her ~$45k. At the time she worth around $600m. I agree, not rational.

Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#102

Post by ricree »

fencepost wrote: post #77
jzwinck wrote: post #32

Earlier quoted context omitted.

No there is not a law against giving legal advice if you're not a lawyer. It's lawyers who are sometimes prohibited from giving legal advice. Non-lawyers have the usual freedom of speech, restricted in the usual ways. Claiming that you are someone you're not on the Internet is so commonplace it is hard to see where any trouble would come of it by itself. Again it's different if you knowingly cause harm to others. I'm…

You sometimes see this as IAALBINYL (instead of the more common IANAL), standing for "I Am A Lawyer But I Am Not YOUR Lawyer" Or, "free legal advice is worth what you paid for it."

It's worth noting, though, that many forms of actual "free" legal advice still come with serious professional obligations on the part of the lawyer. Pro-bono work, public defenders, contingency basis, etc are free to some extent, but nonetheless create a client relationship that is at least nominally as serious as one that is paid for.

There is a reason that lawyers online are very quick to point out that they are not opening up such a relationship.

Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#103

Post by godelski »

korethr wrote: post #7

So, does this count as insider trading? My intuition says 'yes'. But my intuition about a thing and what the law says don't always match.

Correlation does not imply causation. But it certainly does cause suspicion. You'd definitely have to look to see if these were normal trades or that they were planned long in advance. Selling like that can be regular.

Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#104

Post by [deleted] »

timack wrote: post #101
ptero wrote: post #91

Earlier quoted context omitted.

Actually it is the state that has to prove mischief. They still enjoy presumption of innocence. I agree the timing is suspicious, but the amounts are pretty small. Even if the stock drops 20% long term due to this (which IMO is highly unlikely), a high ranking executive risking a jail term to avoid losing 50k of stock is (again IMO), absolutely irrational.

Martha Stewart's insider trading saved her ~$45k. At the time she worth around $600m. I agree, not rational.

[deleted]

Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#105

Post by chrischen »

devmunchies wrote: post #25
hqian wrote: post #16

Earlier quoted context omitted.

Most likely yes. Actually if this doesn't count I don't know what is. However just like you, don't take my word, not a lawyer.

Off topic question... Is there a law about giving legal advice in a public forum if you're not a lawyer? Why do people add the disclaimer about not being a lawyer. Generally curious. Moreover, is there a law about impersonating lawyer in a public forum (not that any ethical person would do that of course)?

It's a meme. People do it because they see other people doing it.

Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#106

Post by toomuchtodo »

thephyber wrote: post #53
jdmichal wrote: post #14

Earlier quoted context omitted.

Insider trading is any trading performed using non-public knowledge. Theoretically even a pre-scheduled trade could be insider trading, if it relied on non-public knowledge which remained non-public until the time the trade executes. Of course, that's a pretty hard scenario to concoct, so generally pre-scheduled trades 3+ months out are considered safe for even high-level insiders. Not to mention all the extraneous m…

Interesting fact: commodities were not subject to such a law in the USA until Frank-Dodd Act. The rule was named for Eddy Murphy, who played a commodities trader in Trading Places[1]. The reasoning, as I heard it, was that all farmers who hedged their own crops with commodities trading, had some amount of insider knowledge just by looking at their own farm/crop/weather. Stealing a data report before it is publicly an…

If you haven't seen Trading Places, please please please make the time to watch it. Its both educating and entertaining!

Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#107

Post by scottlamb »

thephyber wrote: post #61
ChuckMcM wrote: post #34

That seems incredibly stupid. The CFO especially would be hard pressed to convince anyone either that he 'didn't know' there had been a breach or define himself as not an 'insider.' If the facts are as reported these folks are in a world of hurt.

It perhaps was stupid, but you forget that the burden of proof is the other way around. I was under the impression C-suites and directors had to file with the SEC in order to sell stock. I'd wager they did and that's how Bloomberg found out about it.

The burden of proof for criminal charges is the other way around. I can think of a few ways he could "in a world of hurt" without being found guilty of criminal charges; in fact without any formal burden of proof:

* A trial or even just discovery for a trial and having to pay lawyers more than he gained from selling this stock.

* Angry shareholders or even board members could demand consequences such as docked pay or termination.

* Negative media attention such as this article.

Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#108

Post by Clubber »

timack wrote: post #101
ptero wrote: post #91

Earlier quoted context omitted.

Actually it is the state that has to prove mischief. They still enjoy presumption of innocence. I agree the timing is suspicious, but the amounts are pretty small. Even if the stock drops 20% long term due to this (which IMO is highly unlikely), a high ranking executive risking a jail term to avoid losing 50k of stock is (again IMO), absolutely irrational.

Martha Stewart's insider trading saved her ~$45k. At the time she worth around $600m. I agree, not rational.

She wasn't actually convicted of insider trading.

After a highly publicized six-week jury trial, Stewart was found guilty in March 2004 of felony charges of conspiracy, obstruction of an agency proceeding, and making false statements to federal investigators

Re: Three Equifax Managers Sold Stock Before Cyber Hack Was Revealed

#110

Post by SAI_Peregrinus »

thephyber wrote: post #60
21 wrote: post #51

So one guy sold 1 mil of stock, the stock dropped 6%, so he avoided a 60k loss. Let's say he expected a 20% drop, and he saved 200k. If a were a millionaire, I wouldn't risk prison for 200k. Even the litigation to avoid prison could cost 100k. And this is the kind of thing you know all angles will be looked into (it took a news agency a few hours to unearth this). If he did it (insider trading), he is very stupid.

Not all risks are the same. You risk death just by getting in a car on a public road. You risk being attacked by a shark if you enter the ocean. It's important to distinguish likelihood from impact. The heavy impact is "prison"; a lighter impact is a civil suit from the SEC or a similar regulator. The likelihood is unknown right now. It probably went up the second Bloomberg published this article, so it might have be…

Intent doesn't matter. Only having knowledge of non-public materially relevant information.

IANAL, TINLA, etc.

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