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Twilio employees, associates charged with insider trading by SEC

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Re: Twilio employees, associates charged with insider trading by SEC

#131

Post by woodruffw »

rosndo wrote: post #108
hodgesrm wrote: post #101

Earlier quoted context omitted.

It depends on your definition of the problem. The problem I would like to solve is ensuring that everyone perceives the market as fair, i.e., not tilted toward parties with access to privileged information.

This implies a truly bizarre understanding of markets and fairness. Was it fair when Enron was valued at $70B? Would the situation have been less fair had insider traders with more information pushed the prices down earlier? Insider trading doesn’t cost anybody anything, it simply allows for more accurate pricing which benefits everybody.

> Insider trading doesn’t cost anybody anything, it simply allows for more accurate pricing which benefits everybody.

Insider trading has an institutional cost: it's corrosive to trust in the market. Retail investors are less likely to make optimal investment decisions if they think that insiders are lurking around every corner. That trust is further diminished if retail investors believe that insiders are not just investing based on insider information, but speculating on higher-order instruments.

It's perfectly fair to note that our current regulations against insider trading aren't ideal, and that the SEC only catches a tiny fraction of all insider trading. But the threat of enforcement does serve as an important root of trust in the market, and removing it is unlikely to serve individual investors well.

Re: Twilio employees, associates charged with insider trading by SEC

#132

Post by kenrose »

daenz wrote: post #57
kieselguhr_kid wrote: post #48

I work in billing software for a publicly traded software company and this is a constant temptation. I'm never gonna do it because I'm not gonna blow up my career for a relative pittance, but I can't tell you how many times I've been annoyed that I couldn't act on private information and make ~$100k or so. These guys are like the kids who saw the Tide Pod challenges and decided to actually eat the pods. I bet insider…

>I bet insider trading is not as fun when you're unemployed and bankrupt. Not just unemployed, likely unemployable by any reputable company in the industry. Also, good on you for having integrity, but honestly what you say is too much for the average person to be tempted with. Does anyone have a solution for lowering that temptation and making these scenarios less likely?

> Does anyone have a solution for lowering that temptation and making these scenarios less likely?

Isn't the status quo doing a sufficient job?

The temptation may be there, but it's abated by the downside risk of fines, prison time, and unemployability.

Re: Twilio employees, associates charged with insider trading by SEC

#133

Post by joshuamorton »

toast0 wrote: post #97
sidewndr46 wrote: post #55

Earlier quoted context omitted.

> Or set up a pre-defined share sale plan in one of these windows, covering the future, and don't touch it. The insider trading training I did at one company specifically mentioned this is against SEC rules and is insider trading. I am unsure if that is actually true, but that is what the company expected us to operate as.

Setting up a 10b5-1 plan with your broker when you don't have material, non-public information, and your broker follows the plan is the way to trade in employer stock with a solid footing if you regularly have material non-public information. (Such as, in this case, a major change in business metrics). Your company may not permit regular employees to setup a 10b5-1 plan, I think they need signof by corporate legal; a…

I think the issue may be that a 10b5-1 is the only way to do this without avoiding liability. Just having your broker make trades for you, even if they're "scheduled", isn't enough.

Re: Twilio employees, associates charged with insider trading by SEC

#134

Post by usea »

RC_ITR wrote: post #72
tempsy wrote: post #31

Earlier quoted context omitted.

i mean it’s not clear it could have been all of them. not really the point i’m making..yes it could have been done exclusively using family that the government clearly knows you’re linked to. maybe more difficult with friends.

Please read the articles before commenting on them: >Sure, Lagudu and Chotu Pulagam knowingly tipped off, or used the brokerage accounts of, their family and close friends – Dileep Kamujula, Sai Nekkalapudi, Abhishek Dharmapurikar and Chetan Pulagam – to trade Twilio options and stock in advance of its May 6,

> Please read the articles before commenting on them:

You don't have to read an article before commenting. Trying to make up rules and hold other people to them is neither kind nor constructive.

Your interpretation of their post is not charitable.

It's explicitly against the guidelines to accuse someone of not reading the article.

https://news.ycombinator.com/newsguidelines.html

Re: Twilio employees, associates charged with insider trading by SEC

#135

Post by tempsy »

RC_ITR wrote: post #72
tempsy wrote: post #31

Earlier quoted context omitted.

i mean it’s not clear it could have been all of them. not really the point i’m making..yes it could have been done exclusively using family that the government clearly knows you’re linked to. maybe more difficult with friends.

Please read the articles before commenting on them: >Sure, Lagudu and Chotu Pulagam knowingly tipped off, or used the brokerage accounts of, their family and close friends – Dileep Kamujula, Sai Nekkalapudi, Abhishek Dharmapurikar and Chetan Pulagam – to trade Twilio options and stock in advance of its May 6,

ok? what is the point? they tipped off family but sharing in the gains.

sorry i said “their own personal account” and not “their family” which they lazily used to try to hide the trading activity?

Re: Twilio employees, associates charged with insider trading by SEC

#136

Post by deObfuscate »

rosndo wrote: post #108
hodgesrm wrote: post #101

Earlier quoted context omitted.

It depends on your definition of the problem. The problem I would like to solve is ensuring that everyone perceives the market as fair, i.e., not tilted toward parties with access to privileged information.

This implies a truly bizarre understanding of markets and fairness. Was it fair when Enron was valued at $70B? Would the situation have been less fair had insider traders with more information pushed the prices down earlier? Insider trading doesn’t cost anybody anything, it simply allows for more accurate pricing which benefits everybody.

So, if I were a trader at Enron who made good money trading electricity and gas then used that money to short the stock based on private information, I'd be doing everyone a service and fighting for fairness. Better yet, I could be one of their auditors at Arthur Andersen.

Re: Twilio employees, associates charged with insider trading by SEC

#137

Post by sidewndr46 »

ethbr0 wrote: post #119
toast0 wrote: post #97

Earlier quoted context omitted.

Setting up a 10b5-1 plan with your broker when you don't have material, non-public information, and your broker follows the plan is the way to trade in employer stock with a solid footing if you regularly have material non-public information. (Such as, in this case, a major change in business metrics). Your company may not permit regular employees to setup a 10b5-1 plan, I think they need signof by corporate legal; a…

IANAL, but a 10b5-1 plan (thanks for reminding me of the naming!) is an affirmative defense, that removes insider trading liability if a trade satisfies all of its conditions. Effectively, (1) the plan is created when one does not have material nonpublic information, (2) that it... "- Specified the amount of securities to be purchased or sold, price, and date; - Provided a written formula or algorithm, or computer pr…

The training I went through explicitly laid out this scenario and explicitly classified it as insider trading if material nonpublic information is found that would make those trades desirable to execute. I've never heard of the SEC prosecuting someone for losing money due to insider trading.

Again, this probably isn't the case legally. But it was enough for an extremely powerful corporation to deem it as such.

Re: Twilio employees, associates charged with insider trading by SEC

#138

Post by mtrovo »

rosndo wrote: post #54
kieselguhr_kid wrote: post #48

I work in billing software for a publicly traded software company and this is a constant temptation. I'm never gonna do it because I'm not gonna blow up my career for a relative pittance, but I can't tell you how many times I've been annoyed that I couldn't act on private information and make ~$100k or so. These guys are like the kids who saw the Tide Pod challenges and decided to actually eat the pods. I bet insider…

> These guys are like the kids who saw the Tide Pod challenges and decided to actually eat the pods. I bet insider trading is not as fun when you're unemployed and bankrupt. Most insider traders are never caught, everyone eating tide pods gets sick.

Not really a matter of most are never caught but a matter of people doing really stupid trades because they think there's no way SEC's paying someone to check they cleared all their open positions to buy deep out of the money call options just days before a big company announcement.

Re: Twilio employees, associates charged with insider trading by SEC

#139

Post by MichaelBurge »

rosndo wrote: post #108
hodgesrm wrote: post #101

Earlier quoted context omitted.

It depends on your definition of the problem. The problem I would like to solve is ensuring that everyone perceives the market as fair, i.e., not tilted toward parties with access to privileged information.

This implies a truly bizarre understanding of markets and fairness. Was it fair when Enron was valued at $70B? Would the situation have been less fair had insider traders with more information pushed the prices down earlier? Insider trading doesn’t cost anybody anything, it simply allows for more accurate pricing which benefits everybody.

If insider trading is legal, you could actively destroy a company from the inside and profit from its downfall.

Like you could buy put options to set up a leveraged short position, take all the company's money, set it on fire in public(or make a stupid acquisition so you can't easily be sued by other shareholders), watch the stock price drop in a predictable manner, and profit from the predictable decrease in equity.

Sort of like how you can't buy life insurance and then immediately commit suicide and still get paid out.

Re: Twilio employees, associates charged with insider trading by SEC

#140

Post by rosndo »

woodruffw wrote: post #131
rosndo wrote: post #108

Earlier quoted context omitted.

This implies a truly bizarre understanding of markets and fairness. Was it fair when Enron was valued at $70B? Would the situation have been less fair had insider traders with more information pushed the prices down earlier? Insider trading doesn’t cost anybody anything, it simply allows for more accurate pricing which benefits everybody.

> Insider trading doesn’t cost anybody anything, it simply allows for more accurate pricing which benefits everybody. Insider trading has an institutional cost: it's corrosive to trust in the market. Retail investors are less likely to make optimal investment decisions if they think that insiders are lurking around every corner. That trust is further diminished if retail investors believe that insiders are not just i…

> Retail investors are less likely to make optimal investment decisions if they think that insiders are lurking around every corner.

But the reality is that there are insiders lurking around every corner. The argument is essentially that we should seek to actively mislead retail investors instead of simply acknowledging this fact.

To me that feels dishonest.

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