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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

#171

Post by ethbr0 »

sidewndr46 wrote: post #137
ethbr0 wrote: post #119

Earlier quoted context omitted.

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.

You'd have to look up recent case law, as with all SEC rules, which may be what your company is referring to.

But that's the explicit design of 10b5-1: that it provides coverage if all its requirements are satisfied.

The SEC can charge you for making favorable trades according to a predefined plan, but they're going to have an uphill battle convicting you, if you kept your broker at arms length and didn't alter your plan beyond what was initially communicated.

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

#172

Post by paulpauper »

ffggvv wrote: post #113
rosndo wrote: post #54

Earlier quoted context omitted.

> 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.

my guess is if they did everything via in person discussions and didnt leave a paper trail of messages, they likely wouldnt have been caught

they almost always get caught. The SEC is so good at detecting this stuff especially when people do it many times thinking they got away with it the first few times. .

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

#173

Post by carimura »

paulpauper wrote: post #164
RspecMAuthortah wrote: post #149

Not a sympathizer of these idiots who clearly thought that would get away. But what really astonishes me is how SEC is consistently after these retail small players when members of congress and its different committees are brazenly involved in insider trading and no one bats an eye. Hell even the Fed itself and its members were involved in trades that could only be explained by insider knowledge. My sense is SEC want…

Because it's not as obvious regarding congress. Person A gets tip, hands to B and makes trade, is a direct link and can be proven in court. Also, Congress has 532 people, so by statistical certainty we should expect some to beat the market.

Sure but many are beating the market by making trades on companies that those members are supposed to regulate.

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

#174

Post by deObfuscate »

daenz wrote: post #142
deObfuscate wrote: post #136

Earlier quoted context omitted.

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.

I think the point that they're making is that there wouldn't be a large opportunity to short Enron if people were insider trading from the very beginning. The price of the stock would be more accurate from the beginning, because people would trade at the first sign of an opportunity to benefit from insider information.

Personally, I think the argument is interesting. Let us split it into technical and cultural concerns.

A market changes according to flow and distribution of public and private information. The more publoc information, the more accurately priced the stock. Insider information increases public information indirectly through trading said stock.

From a cultural standpoint, many people do not trade on insider information because it is seen as unfair or immoral. A number of people abstain because it is illegal. Some do trade based on self interest and the disproprotiate personal gains to risk involved.

Nowhere, in any of this is the quality and manner of disclosure. Ultimately, it just creates another financial game where people race to see who can get the information quickest.

Needless to say, the systems of reporting in corporations would adjust and the largest share of gains would be made by those who have large holdings of stock. At the same time, it takes away a measure of enforcement and adds traders who were deterred by laws and morals.

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

#175

Post by tlb »

This seems surprisingly far down the list of what SEC's priorities should be. A million dollar fraud when there are almost certainly billion dollar frauds ongoing.

One theory for going after small fish is that fraudsters often start small and get bigger and more sophisticated (and harder to catch). Therefore, it's good to nail them early and signal to other junior fraudsters that they're not underneath the radar.

It'd be interesting to take famous big-time fraudsters and work backwards to the very first crime they got away with. And reckon how much time and resources could've been saved if they'd caught them then.

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

#176

Post by economist6373 »

rcMgD2BwE72F wrote: post #168
economist6373 wrote: post #144

Earlier quoted context omitted.

> If insider trading is legal, you could actively destroy a company from the inside and profit from its downfall. What you are describing is an entirely different kind of misconduct than “insider trading”.

Yes but it is one that insider trading incentivizes greatly.

This doesn’t make any sense.

Such activities would be criminal regardless of insider trading. What difference could it possibly make if insider trading was legal?

Should we maybe add more laws to forbid such activity in different creative ways, so instead of being doubly illegal it would be triply illegal?

Crazy.

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

#177

Post by jdmichal »

mgfist wrote: post #43
ethbr0 wrote: post #21

Earlier quoted context omitted.

You're not supposed to do that at all. You could argue you didn't possess any material non-public information, but since essentially every internal document you access is non-public information, that's probably not an argument you want to deal with. Just trade your own company's shares in the windows after earnings releases. Or set up a pre-defined share sale plan in one of these windows, covering the future, and don…

Many companies, and (most?) tech companies have trading black out periods that are lifted for about a month a few days after earnings. It applies to your personal brokerage account too, even though they can't technically enforce it.

I worked at a bank. They 100% had access to my personal brokerage accounts. It was a condition of employment.

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

#179

Post by deObfuscate »

economist6373 wrote: post #147
woodruffw wrote: post #143

Earlier quoted context omitted.

I think it would be dishonest to do so actively, which is why I try to acknowledge that the SEC's current ability to enforce insider trading laws is relatively weak and ineffective. I think it's my civic duty to not only inform others of that fact, but also to advocate for better enforcement.

Good enforcement is impossible. You can never meaningfully hinder insider trading, far too many people have access to insider information. They don’t have to make the trades themselves either. > I think it would be dishonest to do so actively That is what the government is doing via legislation.

Good enforcement isnt impossible. Improbable, yes.

Every trade has to be disclosed. There isn't a block-chain involved, but their is an e-paper trail. We are on a technology forum in a time where ten people could probably put together a domain model that tracks potential conflicts based on peoples trades, google contacts, and linkedin profile. And any person who traded on insider information in the past probably leaves a pattern.

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

#180

Post by FateOfNations »

ramesh31 wrote: post #90
extr wrote: post #8

What a lame way to insider trade. I thought that instance of the Capital One analysts using internal database queries to understand which retailers were having good quarters was far more interesting and insidious. Similarly you could imagine a lot more subtle ways to leverage insider Twilio information (count of verification texts sent by client?) to make far more obscure bets. The SEC definitely takes a look at anyo…

>I thought that instance of the Capital One analysts using internal database queries to understand which retailers were having good quarters was far more interesting and insidious. How is this seriously different than what any one of a million other "AI analytics" companies are doing with customer data right now?

The difference is public vs. non-public information. Doing something like counting cars in retailers parking lots is something any investor could do (or pay someone else to do). Trading using trends from non-public credit card transaction data isn't something that any "general public" investor could do on their own.

Also note this is about buying and selling securities, not selling consumer data for marketing purposes.

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