Twilio employees, associates charged with insider trading by SEC • Hacker News Board

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

#21

Post by ethbr0 » Mon, Mar 28, 2022, 8:52 PM UTC

tempsy wrote: post #11

runako wrote: post #9

I'm sure the SEC has an array of tools with which to comb through the data, but I would bet that the vast majority of these cases against non-professional traders are flagged by identifying retail brokerage accounts where the notional value of options outstanding is 1) larger than some % of the the portfolio size (e.g. > 50%) 2) with exposure concentrated on 1-3 stocks 3) with no similarly-sized follow-up trades in o…

uhm it’s not even that difficult. they just see if you traded in your own account for a company you work for around earnings. i’m pretty sure you’re not supposed to do it at all but maybe dependent on the situation.

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't touch it.

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

#22

Post by syshum » Mon, Mar 28, 2022, 8:52 PM UTC

notch656a wrote: post #14

syshum wrote: post #6

Earlier quoted context omitted.

if you are in the position of knowing secret data of a publicly traded company, and you are uncomfortable with the position of possibly losing money because you can not act on the secret data, I would suggest you not hold stock for companies you know secret data about No insider trading should not be legal

>I would suggest you not hold stock for companies you know secret data about I imagine the way this works out for non-idiot inside traders, is that their cousin or close friend holds the stock instead. Insider trading is really only discoverable when performed by the stupid or complacent.

while I agree, the cousin / close friend is pretty stupid as well unless you are making minor moves. That would be easily discovered as well

However I agree with the principle that it easy to do if you have any level of intelligence (and no i am not giving way how I would do it ;) )

I dont know the full solution, but it is clear by just looking at US Congress that more work needs to be done on solving insider trading

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

#23

Post by RC_ITR » Mon, Mar 28, 2022, 8:53 PM UTC

tempsy wrote: post #11

runako wrote: post #9

I'm sure the SEC has an array of tools with which to comb through the data, but I would bet that the vast majority of these cases against non-professional traders are flagged by identifying retail brokerage accounts where the notional value of options outstanding is 1) larger than some % of the the portfolio size (e.g. > 50%) 2) with exposure concentrated on 1-3 stocks 3) with no similarly-sized follow-up trades in o…

uhm it’s not even that difficult. they just see if you traded in your own account for a company you work for around earnings. i’m pretty sure you’re not supposed to do it at all but maybe dependent on the situation.

>The Securities and Exchange Commission today announced insider trading charges against three software engineers employed at Twilio, Inc., a San Francisco-based cloud computing communications company, and four family members and friends for allegedly generating more than $1 million in collective profits by insider trading ahead of the company’s positive first quarter 2020 earnings announcement on May 6, 2020.

This, along with the 'Tipper/Tippee' language implies that the named engineers did not in fact trade in their own accounts.

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

#24

Post by syshum » Mon, Mar 28, 2022, 8:54 PM UTC

derekp7 wrote: post #10

syshum wrote: post #6

Earlier quoted context omitted.

if you are in the position of knowing secret data of a publicly traded company, and you are uncomfortable with the position of possibly losing money because you can not act on the secret data, I would suggest you not hold stock for companies you know secret data about No insider trading should not be legal

Something I was always curious about, but I lack the legal background to find the answer. What if public information showed that you should sell the stock, but you decide to hold it instead (i.e., not do anything at all) because you have insider information that the company will be doing much better than expected? The "not selling" part (assuming you bought stock prior to having insider knowledge) is a form of inside…

not a lawyer, but inaction should never be criminalized.

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

#25

Post by rossdavidh » Mon, Mar 28, 2022, 8:54 PM UTC

tempsy wrote: post #2

I can’t understand the rationale behind blowing up your life and career in which you made $300k+/year for a tiny $1m gain split between 3 people and their families. Why are people who should otherwise be much smarter than this doing incredibly dumb things? Just greed? and entitlement?

My wife owns a small retail clothing store. It is her experience that the people who attempt to steal, are not generally lower income, they are often among the most well-to-do members of the population that goes through her store. Very different stakes, and very different age group (she mostly sells to teenagers and twentysomethings), but same psychology, I think. "I'm not the sort of person who gets arrested and sent to prison". Which is true until suddenly it isn't.

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

#26

Post by notch656a » Mon, Mar 28, 2022, 8:54 PM UTC

sp332 wrote: post #15

charcircuit wrote: post #12

Earlier quoted context omitted.

In my example the company is not reporting to any shareholders. You are doing trades based off of information that you have collected yourself.

-

>If you're using information anyone could get with some research, then it's not illegal.

If I am willing to give out information gained during employment of the company to anyone asking as part of their research, then by this definition it's not illegal, as anyone can get the information with some research.

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

#27

Post by xyst » Mon, Mar 28, 2022, 8:55 PM UTC

This is a proud win in the SEC handbook? $1 million dollars is fucking chump change. Whales do this on a 1000X scale every fucking day (yes billions). They even collaborate amongst other trading firms to pump and dump. Where's the prosecution related to the GME + Citadel Securities + Melvin Capital illegal naked short selling? Remember when this group was hemorrhaging billions of dollars and forced RH to remove the "Buy" button on GME?

I ask again, where's the prosecution there?

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

#28

Post by mgraczyk » Mon, Mar 28, 2022, 8:55 PM UTC

broknbottle wrote: post #16

When is the announcement happening for the members of congress that made investments in key areas after they were briefed on covid-19 and potential impact? > We are a free market economy. They should be able to participate in that

All the specific allegations that I looked into were absolutely not insider trading. The heavily scrutinized Pelosi trades, for example, were pre-planned rolling of options that did not generate profits directly and would have been executed very differently if the trader had any foreknowledge of future price movements in the underlying. People often sell and buy options at different expiry dates to keep their position static, not to trade based on new information.

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

#29

Post by rossdavidh » Mon, Mar 28, 2022, 8:56 PM UTC

charcircuit wrote: post #4

All insider trading should be legal. Imagine the opposite case. You know your company is doing poorly but the government forces you to not sell your stock and take a loss.

In those countries where insider trading is either explicitly allowed or laws against it are never enforced, nobody without inside information wants to play, because they know the game is rigged.

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

#30

Post by sneak » Mon, Mar 28, 2022, 8:56 PM UTC

sp332 wrote: post #5

charcircuit wrote: post #4

All insider trading should be legal. Imagine the opposite case. You know your company is doing poorly but the government forces you to not sell your stock and take a loss.

It's only illegal if you're using secret information. The company can't report info to some shareholders and not others.

No, it's only illegal if you are using secret information accessed with privileged insider access.

If you do research and deduce nonpublic (secret) data and use that, that is fine. The classic example is inferring sales data from customer traffic by observing the parking lot utilization at regular intervals.