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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

#191

Post by nebula8804 »

ethbr0 wrote: post #98
nebula8804 wrote: post #51

Earlier quoted context omitted.

>Being constantly coddled in some way dulls your ability to recognize when circumstances have changed, and those safeguards are no longer present. It will be interesting to see this happen nationwide if the music were to stop(or slow down) in the US economy as some are predicting.

That's what the 2008 crisis was at its root -- too many people, at all levels, who'd forgotten to be alert for danger and mistakenly assumed that the recent past served as fundamental bounds of future possibility.

Yes but a large chunk of the country never really felt the music stop in that crisis. I wonder if they find a way to keep kicking the can down the road indefinitely. If not, then we will finally see what happens.

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

#192

Post by economist9374 »

mlazos wrote: post #165
rosndo wrote: post #96

Earlier quoted context omitted.

Indeed, insider trading benefits everybody by adding more information to the markets, leading to more accurate prices.

Prices are a function of number of market participants and information of each participant. If insider trading is legal, fewer people will participate in the market because they will lose out due to information asymmetry and this will lead to pricing inefficiencies. What’s interesting is that what others are willing to pay is key public information as well.

> If insider trading is legal, fewer people will participate in the market because they will lose out due to information asymmetry and this will lead to pricing inefficiencies.

This only makes sense in a world where regulators can effectively prevent insider trading, that’s not the world we live in though.

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

#193

Post by paulpauper »

carimura wrote: post #173
paulpauper wrote: post #164

Earlier quoted context omitted.

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.

what is one such example of a trade. I can only find examples of congresspeople making stock trades, not trades based off of specific pieces of insider information in a manner similar to this SEC report. Do you mean trades initiated before legislation?

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

#194

Post by JumpCrisscross »

economist6373 wrote: post #181
deObfuscate wrote: post #179

Earlier quoted context omitted.

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 leav…

Fine, this feels needlessly pedantic but let me correct myself. Good enforcement is impossible without subjecting anybody trading stocks and everybody they know to a completely unprecedented level of surveillance. This would have to go far beyond the wildest Snowden revelations. Perhaps not completely impossible in theory, but absolutely infeasible in practice. Building such a system would also be likely to result in…

> enforcement is impossible without subjecting anybody trading stocks and everybody they know to a completely unprecedented level of surveillance

Why? Just look for a pattern of abnormal returns. (Hint: the SEC does this.) It's much easier to check for insider information after the fact than it is to profitably trade on it.

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

#195

Post by paulpauper »

throw10920 wrote: post #185
paulpauper wrote: post #164

Earlier quoted context omitted.

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.

> Also, Congress has 532 people, so by statistical certainty we should expect some to beat the market. Congress has many individuals that consistently beat the market by significant margins over a prolonged period of time, far past the point of reasonable arguments that you can make based on statistics.

Congress may outperform in the aggregate, but this is not enough to prove that they illegally traded. There are other possible explanations.

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

#196

Post by economist9374 »

JumpCrisscross wrote: post #194
economist6373 wrote: post #181

Earlier quoted context omitted.

Fine, this feels needlessly pedantic but let me correct myself. Good enforcement is impossible without subjecting anybody trading stocks and everybody they know to a completely unprecedented level of surveillance. This would have to go far beyond the wildest Snowden revelations. Perhaps not completely impossible in theory, but absolutely infeasible in practice. Building such a system would also be likely to result in…

> enforcement is impossible without subjecting anybody trading stocks and everybody they know to a completely unprecedented level of surveillance Why? Just look for a pattern of abnormal returns. (Hint: the SEC does this.) It's much easier to check for insider information after the fact than it is to profitably trade on it.

>(Hint: the SEC does this.)

Does it work? (Hint: no)

> It's much easier to check for insider information after the fact than it is to profitably trade on it.

This is only true for the least sophisticated insider traders.

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

#197

Post by economist9374 »

deObfuscate wrote: post #157
daenz wrote: post #127

Earlier quoted context omitted.

To people disagreeing with this, can you give a counter argument? On face value, what rosndo said seems to make sense.

Their obviously wasn't much thought put in to this. Anywhere that a conflict of interest occurs has potential for abuse. If the officer/employee/agent has the ability to influence the result and profit then their is a conflict of interest. The legal ramifications are lessened and the cost to benefit subsequently decreases. Auditors are a good example. They have privileged information and are responsible for the fairn…

> The auditors could potentially place bets on their engagements and negotiate results based on their interests. Impartiality would be compromised

This is a very odd straw man.

What you are describing would still be a crime in a world in which insider trading is legal.

I think you are the one who didn’t put much thought into this.

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

#198

Post by KerryJones »

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?

This reminds me of the problem before we had the cash register (which Charlie Munger has talked about quite a lot). It was a constant problem, most people companies had a lot of theft. The constant ease of access was just too much for most people to do, adding in a cash register reduced this theft by a lot. It's unlikely these were "bad people" by most definitions, undisciplined, perhaps they meant to repay it, perhaps they had a serious ill.

We need a modern day equivalent of a cash register.

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

#199

Post by deObfuscate »

rosndo wrote: post #130
daenz wrote: post #124

Earlier quoted context omitted.

That's an interesting perspective. So in a way, insider trading corrects the market because the difference between what is known and what is unknown should not result in a vast difference in valuation.

Exactly. It is the perspective often repeated by economists. There exists little political will to legalize insider trading because it would be hard to sell to a public that doesn’t even understand why stock markets exist. To the average person on “insider trading” is just bad stuff evil rich people on wall street do. In reality the arguments in favor of banning insider trading are actually quite weak, usually relyin…

Economists aren't a monolith.

Legalizing insider trading does nothing for fairness.

The SEC does catch insider trading. And yes, they could do better.

Your morals are showing. Just because you can justify it doesn't make it so for most.

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

#200

Post by economist9374 »

JumpCrisscross wrote: post #182
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.

> Most insider traders are never caught Executing an inside trade profitably and secretly is difficult. Catching it ex post facto is easy. (The SEC scans for unusually profitable trades and accounts. These systems are thorough, clever and effective. When they're updated, they re-run back data through the statute of limitations.) This is the P != NP element of insider trading that outsiders miss. It's why inside trade…

This is not at all in line with research on the field.

> It's why inside traders are usually unsophisticated

Insider traders who get caught are usually unsophisticated.

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