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Twilio employees, associates charged with insider trading by SEC

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201–210 of 302 posts

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

#201
post #130

Earlier quoted context omitted.

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.

So, you don’t actually have an argument to make?

> Legalizing insider trading does nothing for fairness

But it does, it increases information available to the public.

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

#202
post #142

Earlier quoted context omitted.

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…

> From a cultural standpoint, many people do not trade on insider information because it is seen as unfair or immoral

Is it immoral to trade on material nonpublic information you happened to overhear in a restaurant?

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

#203
post #57

Earlier quoted context omitted.

>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?

There is no solution better than the current ones. After a company I worked with was acquired by a public company, I was given a role that included accessing to sensitive information in financial dbs. Along with that was a welcome email from the chief counsel, then every quarter came emails listing blackout dates. I nave traded in the company’s stock or options, but it would have been incredibly clear when I was prev…

Some companies will also work with the financial group they administer their equity and ESPP through, so you literally -can't- trade on certain dates. You probably shouldn't be buying company stock outside of those anyway, given the limited trading windows, the scrutiny, and the lack of diversification.

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

#204
If the employees were receiving (vesting) a standard monthly amount of RSUs for compensation, normally selling immediately upon vesting, and decided to wait a couple months based on inside information about company performance that they were just naturally exposed to during their work, would that be considered insider trading? I assume it would. Hmm... it's kind of scary how easy it would be to inside trade without really thinking about it, or even without being that intentional about it.

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

#205
post #165

Earlier quoted context omitted.

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.

Does it really? We have a lot of laws and activities where we know there not perfect, yet we set the right incentives. Having laws against murder does not effectively prevent most of murder from happening.

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

#206
post #204

If the employees were receiving (vesting) a standard monthly amount of RSUs for compensation, normally selling immediately upon vesting, and decided to wait a couple months based on inside information about company performance that they were just naturally exposed to during their work, would that be considered insider trading? I assume it would. Hmm... it's kind of scary how easy it would be to inside trade without r…

> would that be considered insider trading

Not by default. Typically, according to the trainings I have received, over and over again, it's only wrong to trade if you are exposed to material non public information (MNPI). Such a person would have to know they are in a special category, unless they live under a rock or something.

I think it's ridiculously difficult for an employee receiving a standard monthly amount of RSUs to "mistakenly" commit insider trading.

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

#207
post #57

Earlier quoted context omitted.

>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?

Legalising insider trading is the simplest solution.

As Matt Levine has rightuflly said:

"What’s odd is not that insider trading law is about theft; what’s odd is that it almost looks like it might be about fairness, and that people think it is."

"One thing that I often say is that insider trading is not about fairness, it is about theft. Whenever an insider trading case is announced, the prosecutors will make a little speech about how financial markets have to be a level playing field, and how the insider traders are cheaters who got the answers before they took the test, but it is all nonsense. Financial markets are not a level playing field; some people will always have faster computers or better resources or more money to spend on research than others, and they should have incentives to find out information that other people don’t have. But more important, the level-playing-field stuff is just not the law. The law doesn’t say that any time you trade on material nonpublic information it’s illegal. The law, to oversimplify a complicated area, makes it illegal to trade on material nonpublic information that you obtained in violation of a duty to someone: It’s illegal for corporate executives to trade on corporate information for their private gain, or to give that information to their buddies in exchange for a personal benefit, or for outsiders to obtain information in confidence and then betray that confidence by trading on it. The real issue is never whether the trading was unfair to the people on the other side; it’s whether the information was misappropriated from its rightful owners."

So how do you make sure the rightful owners have access to the same information?

https://www.bloomberg.com/opinion/articles/2019-03-13/you-ha...

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

#208
post #204

If the employees were receiving (vesting) a standard monthly amount of RSUs for compensation, normally selling immediately upon vesting, and decided to wait a couple months based on inside information about company performance that they were just naturally exposed to during their work, would that be considered insider trading? I assume it would. Hmm... it's kind of scary how easy it would be to inside trade without r…

Most public company equity sales are subject to blackout periods where you cannot sell (usually prior to release of financials) because it is presumed anyone with equity compensation views material non-public information as a matter of course. Selling in those dates is subject to liabilities for the employees.

That said if your equity management system doesn’t handle this for you, you have other problems.

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

#209

Earlier quoted context omitted.

> 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.

Does it really? We have a lot of laws and activities where we know there not perfect, yet we set the right incentives. Having laws against murder does not effectively prevent most of murder from happening.

No post body was provided.

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

#210

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 positio…

ahh yes, the classic "we investigated ourselves and found we did nothing wrong"

Sorry if I do not trust their investigation

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