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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

#151

Post by achillesheels »

dheera wrote: post #112
aeternum wrote: post #109

Earlier quoted context omitted.

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.

Perhaps. But why do we actually care about market fairness? I care that companies get shit done. I want to see electric cars, cancer cures, solar power, and vaccines. I don't care that the markets are fair. If an unfair market means I get those things faster I'm all for it. FWIW I get cheaper strawberries than most people because I'm good at bargaining. Markets aren't supposed to be fair, they're supposed to factor i…

We need integrity in markets so that our future well-being is secured. I suspect your judgment is a major reason why your ancestry never cultivated sophisticated capital markets.

“Without fundamental trust / there is no trust at all.” Tao Te Ching 17

Re: Six charged in Silicon Valley insider trading ring

#152

Post by sam345 »

I believe the standard economic argument to allow insider trading is that it would encourage much quicker uncovering of and dissemination of good and bad news. E.g. if people inside Enron had traded on inside info that Enron had cooked the books than it likely would have kept the brakes on the stock price. Instead you have regs that jail insiders (usually people lower down on the totem pole as the higher ups benefit from the coverup) for leaking correct information and preventing a correct (lower) price.

Re: Six charged in Silicon Valley insider trading ring

#153

Post by xwolfi »

School-Cotton wrote: post #127
dheera wrote: post #106

Earlier quoted context omitted.

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…

> If you can make friends with people who have insider info, you should be rewarded with your networking prowess. Why? How does rewarding people for this serve any useful social or economic purpose?

Darwinist evolution in this person's mind: by rewarding inside networkers and punishing late to the party outsider, you'd reach a state where everyone "cheats" to a point this behavior would be the norm.

If we push the wild west theory to its limit, we'd end up in a world where formerly insiders' financial news would cycle and ripple at super fast pace, akin to having a public mic in every trading floor.

This is probably what this person think would be the fairest: instead of a hard to enforce artificial safety, we'd have a transparent, free to join jungle.

But he fails to see most people arent sharks and therefore electors or noisy public representatives always push to slow things down.

Re: Six charged in Silicon Valley insider trading ring

#154

Post by wpietri »

BeFlatXIII wrote: post #142
wpietri wrote: post #45

Earlier quoted context omitted.

It really shouldn't. At a societal level, the point of having a stock market at all is to increase the amount of investment capital available. An unregulated market where people are at significant risk of big losses due to crime, fraud, etc is one that will not attract nearly as much capital. Less investment capital means less growth and a poorer society. As proof that regulation is valuable, look at all of the forei…

Fair point on the marketplace of marketplaces. Using taxpayer dollars and prisons to enforce a transparent and accountable market still rubs me the wrong way. Outright fraud (eg. a dishonest broker pocketing the $100 instead of purchasing the stock for his client), I have no problems prosecuting with the full force of the government. It’s the rules that provide an illusion of being something other than buyer beware t…

From the US perspective, the markets run at a healthy profit; they surely generate far more in taxes than they require in regulatory expenditures. And the exchanges themselves do much of the policing of companies, so the actual costs are low. Public markets require the same sort of policing as public streets if they're to remain reasonably safe and effective for the public.

Re: Six charged in Silicon Valley insider trading ring

#155

Post by [deleted] »

hervature wrote: post #128
dheera wrote: post #106

Earlier quoted context omitted.

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…

Your other comments show that you don't understand three concepts when it comes to insider: 1) who an insider is 2) what information is privileged and 3) why is it bad. 1) Many jurisdictions have specific people (officers and major owners) designated. The US is fairly unique in that an insider is someone who trade on material non-public information that violates trust. This is what allows for these friends of low lev…

[deleted]

Re: Six charged in Silicon Valley insider trading ring

#156

Post by dheera »

hervature wrote: post #128
dheera wrote: post #106

Earlier quoted context omitted.

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…

Your other comments show that you don't understand three concepts when it comes to insider: 1) who an insider is 2) what information is privileged and 3) why is it bad. 1) Many jurisdictions have specific people (officers and major owners) designated. The US is fairly unique in that an insider is someone who trade on material non-public information that violates trust. This is what allows for these friends of low lev…

> That in the event of something bad happening, the insiders don't get to bail first.

I don't get this. What's wrong with victimized insiders, who are just drones and aren't responsible for the decisions of the company, bailing first?

What I think makes much more sense is to not let large shareholders, especially executives with decision-making power, bail first.

Small insiders are typically victims, not perpetrators, of bad news, and not rewarded enough for good news.

How about a system in which if a low-paid worker of a company (say a warehouse worker, driver, etc. who is having trouble paying their rent) trades 1 share, it goes through in 1ms, giving them an edge over the hedge funds, but if the CEO trades 100000 shares, it takes 3 months before the order goes into the order book and gets executed? In such a system we could allow insider trading, it's just that those trying to bail out of millions of dollars just can't.

Re: Six charged in Silicon Valley insider trading ring

#157

Post by refurb »

tw600040 wrote: post #13

For anything worth securing we have security engineered into it, like passwords, encryption what not. But for insider trading we are just supposed to assume that the players play right without any checks or balances? I don't think just the SEC is sufficient to prevent this.

You don’t think they are monitoring trades around earnings calls that have huge pay offs?

Re: Six charged in Silicon Valley insider trading ring

#158

Post by johntb86 »

throwaway0a5e wrote: post #149
johntb86 wrote: post #116

Earlier quoted context omitted.

The SEC complaint mentions this: > On August 5, 2016, Brown—whose tips enabled his friend, Wylam, to make nearly one million dollars—texted his then-girlfriend to inform her that he was going to Wylam’s house to, among other things, “talk to him about $.” One week later, on or around August 12, Brown took a photograph of numerous one hundred dollar bills spread across his bathroom sink. > On or about October 10, 2016…

That makes much more sense. Where did you find the full text of the facts the government alleges?

The complaint is under "Related Materials" on the right side of the page.

Re: Six charged in Silicon Valley insider trading ring

#159

Post by hervature »

dheera wrote: post #156
hervature wrote: post #128

Earlier quoted context omitted.

Your other comments show that you don't understand three concepts when it comes to insider: 1) who an insider is 2) what information is privileged and 3) why is it bad. 1) Many jurisdictions have specific people (officers and major owners) designated. The US is fairly unique in that an insider is someone who trade on material non-public information that violates trust. This is what allows for these friends of low lev…

> That in the event of something bad happening, the insiders don't get to bail first. I don't get this. What's wrong with victimized insiders, who are just drones and aren't responsible for the decisions of the company, bailing first? What I think makes much more sense is to not let large shareholders , especially executives with decision-making power, bail first. Small insiders are typically victims, not perpetrator…

You are failing to understand the information component again. Insiders can definitely trade. The low-paid worker and CEO can trade just like outside investors. But the CEO is under much closer scrutiny and thus usually have regular stock sales so that they can claim "I have been selling 1,000 shares every month for the last 3 years" when faced with criticism. Again, the low-paid worker is free to trade whenever. But if the SEC spots an someone who consistently gets outsized returns in peculiarly timed trades, they are going to investigate. That person better have no proof of material non-public information at the time of those trades.

Re: Six charged in Silicon Valley insider trading ring

#160

Post by mirker »

dheera wrote: post #156
hervature wrote: post #128

Earlier quoted context omitted.

Your other comments show that you don't understand three concepts when it comes to insider: 1) who an insider is 2) what information is privileged and 3) why is it bad. 1) Many jurisdictions have specific people (officers and major owners) designated. The US is fairly unique in that an insider is someone who trade on material non-public information that violates trust. This is what allows for these friends of low lev…

> That in the event of something bad happening, the insiders don't get to bail first. I don't get this. What's wrong with victimized insiders, who are just drones and aren't responsible for the decisions of the company, bailing first? What I think makes much more sense is to not let large shareholders , especially executives with decision-making power, bail first. Small insiders are typically victims, not perpetrator…

You’d have to also control external “laundering” of money through the insiders. The hedge funds could pay the insiders for trades or information.
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