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Six charged in Silicon Valley insider trading ring

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Re: Six charged in Silicon Valley insider trading ring

#101

Post by zhengyi13 »

u678u wrote: post #33
fny wrote: post #4

> Bannon agreed to pay a civil penalty of $281,497, Rauch agreed to pay a civil penalty of $128,230, and Ramaiya agreed to pay a civil penalty of $65,780. Sood also consented to the entry of a final judgment and agreed to pay a civil penalty of $178,320. So the SEC claims they found $1.7M in insider trading, and they only collect $700K. This assumes the ring didn't do more. No wonder bigger players do this in size. W…

I'm guessing the penalty is low because they're not professionals. > No wonder bigger players do this in size. What a joke. Not sure who you mean by that. SEC is all over every major player.

I don't know who GP might have had in mind, if any specifics, but what comes immediately to my mind at least is the whole-lotta-smoke that seems to come from the general vicinity of Congress (e.g. https://en.wikipedia.org/wiki/2020_congressional_insider_tra...).

Re: Six charged in Silicon Valley insider trading ring

#102

Post by xxpor »

endisneigh wrote: post #5

White collar crimes are barely punished - what a joke. Insider trading isn’t larceny, but for the sake of conversation let’s say it was - 1 million in insider trading would be like 4000 counts of grand larceny, each of which carry a max fine of 25K each. If people were actually fined 100 million for 1 million of insider trading I bet you it’d stop happening. For comparison $250 or more stolen is grand larceny and has…

The real penalty is having a federal felony on your record.

Good luck ever getting a white collar job ever again.

Research has shown that (especially) for non-violent crimes, the real deterrent is getting caught at all, not the amount of punishment.

Re: Six charged in Silicon Valley insider trading ring

#103

Post by cltby »

In light of the AP's new policy on minor crime reporting, I was curious how they would treat this story. Unfortunately, their website has no coverage. However, they did report today on another (alleged) insider trading case, and they use names liberally.

[1] https://apnews.com/article/nyc-state-wire-ny-state-wire-new-...

Re: Six charged in Silicon Valley insider trading ring

#104

Post by byset »

jessaustin wrote: post #69
JumpCrisscross wrote: post #56

Earlier quoted context omitted.

> the only people who like it are the people high status enough to not be subject to it Everyone at the SEC is keenly aware that bagging a high-ranking financier is a ticket to higher office.

Can we come up with an example of an SEC official building upon an investigation of a "high-ranking financier" in order to obtain high office?

SEC pursued junk bond pioneer Michael Milken in the 1980s, Ivan Boesky before that… unsure of specifics of SEC personnel getting to “high office” because of that but seems obvious that high profile successful prosecutions would be career-making

(Granted those examples are from the 80s but i would think there are more recent examples…)

Milken was prosecuted by Rudy Giuliani which didn’t hurt Giuliani’s career, but Rudy was a US district attorney or something, not SEC

Agree with your sentiment generally though, seems like a boatload of people could have been put away after the financial crisis but they instead profited from bailouts

Re: Six charged in Silicon Valley insider trading ring

#105

Post by nverno »

dcolkitt wrote: post #80
endisneigh wrote: post #5

White collar crimes are barely punished - what a joke. Insider trading isn’t larceny, but for the sake of conversation let’s say it was - 1 million in insider trading would be like 4000 counts of grand larceny, each of which carry a max fine of 25K each. If people were actually fined 100 million for 1 million of insider trading I bet you it’d stop happening. For comparison $250 or more stolen is grand larceny and has…

But insider trading isn’t comparable to larceny whatsoever. There is no definitive victim. Yes, in some sense the market is “less fair”. But the purpose of insider trading law isn’t to create a level playing field. It’s perfectly legal for a well-funded hedge fund to fly helicopters over an oil refinery with infrared cameras, so they can know ahead before a public announcement how much revenue the company is doing. R…

It's more comparable to people taking a shortcut down a switchback or through a garden. If a few people do it, no big deal, if everyone does it the whole thing falls apart. When I hear about insider trading I don't care one way or the other about the people who did it- but I do lose some faith in the market.

Re: Six charged in Silicon Valley insider trading ring

#106

Post by dheera »

wp381640 wrote: post #12

> Nathaniel Brown, [..] repeatedly tipped Infinera’s unannounced quarterly earnings and financial performance to his best friend, Benjamin Wylam > Wylam, [..] and also tipped Naveen Sood > Sood allegedly traded on this information and tipped his three friends Marcus Bannon, Matthew Rauch, and Naresh Ramaiya It's less a ring and more a tree One of the issues with leaking the info - you have no control over what is don…

Why don't we apply Darwinism to the financial world? The fittest survive. If you can make friends with people who have insider info, you should be rewarded with your networking prowess. It's quite an underrated skill. That's how startup investing works anyway.

Separately, announce earnings with some injected noise. Keep announcing corrections in the following several days so that it eventually converges to the correct value. That would be fun! I'd absolutely love to see the Wall Street suit-and-tie hedgehog fund people writhing in anguish while the retail investors don't take a shit.

Re: Six charged in Silicon Valley insider trading ring

#107

Post by neolog »

WalterBright wrote: post #42
mgkimsal wrote: post #36

Earlier quoted context omitted.

> The death penalty didn't stop ... Are you sure? How would you be sure? If there's even a few people who've come close to committing a crime, then considered the punishment (prison/execution), then decided against the crime... isn't that "stopping" it?

> Are you sure? Since people kept getting hung for pickpocketing, the thread obviously failed to deter them. > isn't that "stopping" it? Reduce it, maybe, but not stopping it.

> getting hung for pickpocketing

When/where did this happen?

Re: Six charged in Silicon Valley insider trading ring

#108

Post by outworlder »

onemoresoop wrote: post #77
paulpauper wrote: post #46

Earlier quoted context omitted.

If guilty, it's a joke that they only have to pay a penalty instead of going to jail. It means it's rational for everyone to try insider trading at least once, knowing that if you fail the worst that can hapepn is you lose your profits.

That's the sad truth, these laws were written with a dedication for the white collar and the rich. We will never get better as a nation if we don't don't address these issues first. Or the alternative is to wait for the house of cards to collapse and start over.

That's all done on purpose.

https://www.youtube.com/watch?v=rStL7niR7gs

Re: Six charged in Silicon Valley insider trading ring

#109

Post by aeternum »

dheera wrote: post #106
wp381640 wrote: post #12

> Nathaniel Brown, [..] repeatedly tipped Infinera’s unannounced quarterly earnings and financial performance to his best friend, Benjamin Wylam > Wylam, [..] and also tipped Naveen Sood > Sood allegedly traded on this information and tipped his three friends Marcus Bannon, Matthew Rauch, and Naresh Ramaiya It's less a ring and more a tree One of the issues with leaking the info - you have no control over what is don…

Why don't we apply Darwinism to the financial world? The fittest survive. If you can make friends with people who have insider info, you should be rewarded with your networking prowess. It's quite an underrated skill. That's how startup investing works anyway. Separately, announce earnings with some injected noise. Keep announcing corrections in the following several days so that it eventually converges to the correc…

Quarterly earnings is pretty antiquated anyway. Perhaps public companies should just report continuous / daily earnings via automated accounting software.

This should make it harder to hide accounting fraud and improve transparency and market fairness.

Re: Six charged in Silicon Valley insider trading ring

#110

Post by elliekelly »

monkeybutton wrote: post #50
elliekelly wrote: post #21

Earlier quoted context omitted.

I was on a call last week about the SEC’s changing priorities under Chairperson Gensler and the consensus among all of the attorneys on the call was that they will be more data-driven and have already been using data analytics far more extensively than ever before. I suspect the case in the linked release came about from those efforts: > “Using sophisticated data analysis, the SEC was able to uncover this insider tra…

Is there somewhere that I could read more about the analytics used to catch insider trading?

I don’t have a good resource to point you to because most of what I know is from having seen data requests and from discussions with colleagues. To my knowledge the SEC hasn’t said much about how they use analytics and I suspect that’s deliberate.

The SEC has been gathering data after big price swings to identify potential insider trading for a while but my understanding is that they’re now able to assign an insider-trading risk-score to transactions that made money (or avoided a loss) by trading just before the swing.

What’s interesting is the risk-score seems to involve some degree of “who you know” and seems to de-emphasize the old metric used to prioritize investigations: how big your profit/loss avoided was. So rather than having to identify the big winners (or loss avoiders) and investigate those transactions they can instead focus on the transactions most likely to have been “tipped” by an insider. (This is entirely my own speculation but I think you can see it a bit in the attached press release. It’s an unusual chain of relationships between and among the six people charged and the two public companies. Insider > tips friend > tips guy who owes him money > tips three friends. I’d venture to guess there was some transaction data that allowed the SEC to form the link between the accounts profiting and the insiders because $1.7 million isn't a terribly huge sum to have SEC staff chasing after.)

It also seems, judging by Gensler’s recent comments, they’re considering gathering data about planned and forgone 10b5-1 transactions presumably for the purpose of applying insider trading analytics.

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