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According to the article, they 'concluded in a joint chat that Twilio’s stock price would “rise for sure.”' I bet there are a lot of folks doing this out there, but they are more careful. So they had a non-encrypted chat room about it. It'd be funny if they found this in the company 's Slack workspace. On top of that, they involved a bunch of other family members. That's too much.
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'…
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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.
Yeah? Any analysis I can read on that? Its kind of low hanging since the US has such high trading volumes far beyond every other market, but I cant accept that as causation alone.
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…
There are probably more lucrative and/or less risky ways of making illicit money.
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> 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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>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.
It's the disparity in revenue information, chunked into quarters, that causes the problem. Some people feel entitled to have early access but that's the problem.
Somebody should have subscribed to the Matt Levine newsletter.
I consider his newsletter as the equivalent of the encyclopedia of ethical failure by DoD for the financial industry.
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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?
Is it likely for you to get caught for insider trading? Probably not.
Especially if you're Joe Blow and you make 10k on this. If you are Joe Blow making 10k also means you did not have a lot of "play money" to act upon overhearing some random conversation. Or you do but didn't trust it fully (how did you know it was 'material' and not just some guys at a business lunch 'boasting' to each other?) and just did it to test waters or have fun.
The larger the sums get I would argue the more likely it is you will get caught because it means you are probably much closer to the actual information than meets the eye. Or it gets caught in some filters based on amount and such that someone starts looking at etc. If you really just completely randomly overhear something like this, how do you judge that it is 'material'? Is someone going to bet his entire savings account on a completely random encounter of overhearing Bill Gates and Warren Buffett discussing something 'material' over lunch and they are in earshot range? And here we are talking major celebrities that probably even Joe Blow would recognize and judge as 'probably material'.
You know what? Even though it's still immoral I totally wouldn't judge Joe Blow betting $100 to make $10.000 on that and put it on the mortgage. He probably bets that same thing on some Superbowl weird odds bet each year and looses.
More likely? Joe Insider knows exactly when Company X and Company Y are gonna announce some multi billion dollar deal because they've been in talks for months and they work in BI to get the numbers for this deal to them and things seem to be getting close. Get a few trades in with the bonus money or proceeds from the RSUs vesting. Immoral act to make 100k of RSUs into 10 million and be set for life.
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This implies a truly bizarre understanding of markets and fairness. Was it fair when Enron was valued at $70B? Would the situation have been less fair had insider traders with more information pushed the prices down earlier? Insider trading doesn’t cost anybody anything, it simply allows for more accurate pricing which benefits everybody.
If insider trading is legal, you could actively destroy a company from the inside and profit from its downfall. Like you could buy put options to set up a leveraged short position, take all the company's money, set it on fire in public(or make a stupid acquisition so you can't easily be sued by other shareholders), watch the stock price drop in a predictable manner, and profit from the predictable decrease in equity.…
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Yea, now just imagine how many smarter people are doing it and getting away with it
Not many? Describe the trade steps necessary to insider trade with high leverage that isn’t trivial for a data analytics program to flag with high confidence?
2. Buy deep OTM call options in… a similar company that’s in the same business as Twilio
3. Never get in any trouble