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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

#291

Post by lupire »

mbesto wrote: post #207
bidirectional wrote: post #91

Earlier quoted context omitted.

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 le…

> 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,

This is wrong. Being better than someone else doesn't make the playing field unlevel.

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

#292

Post by foolinaround »

the other factor that is not considered is that while the crime happened in the US, there is no single culture in which employees are from, considering immigration, early experiences etc.

the standards that people in a society hold can linked to the level of corruptions in said society and what is ok is vastly different. The temptation is the same, but not the reaction to it....

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

#293

Post by extr »

kasey_junk wrote: post #269
extr wrote: post #256

Earlier quoted context omitted.

I don't find it hard to imagine. 1. Work for a company that provides signal-giving infrastructure for a variety of companies across disparate industries. Twilio is actually a perfect example. 2. Find someone to work with that already has or is willing to build a plausible history of so-so trades. 3. Occasionally tip this person off that company Y in industry X is about to have a good quarter. Never trade the same com…

That provides extremely low edge for both parties involved. Your participant with a history of trades could just as easily do research using public information (company press release aggregation is a classic version) to get similar edge without entering a criminal conspiracy. Notice I mention high leverage. There are 2 challenges (as I see it) to committing insider trading. The first is having information ahead of ti…

I guess I'm imagining more of a situation where you are working with someone (or yourself) that already has a sophisticated understanding of the market's expectations, and you wait for opportunities where your inside info is not priced in well. Eg, a delivery app is expected to have another strong quarter of growth, but your data says that growth has stalled.

However if I'm reading your point correctly, you're saying this is harder than it sounds. If you already have a "sophisticated" understanding of the market enough to make this work with low edge, why bother with a criminal conspiracy. And to make outsized returns, you need to use lots of leverage, in which case you're taking on more risk of exposure.

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

#294

Post by extr »

refurb wrote: post #270
extr wrote: post #256

Earlier quoted context omitted.

I don't find it hard to imagine. 1. Work for a company that provides signal-giving infrastructure for a variety of companies across disparate industries. Twilio is actually a perfect example. 2. Find someone to work with that already has or is willing to build a plausible history of so-so trades. 3. Occasionally tip this person off that company Y in industry X is about to have a good quarter. Never trade the same com…

How do you get the profit into your hands? Cash? Bitcoin? Will this other person keep their mouth shut when the SEC comes knocking because some very successful traders seems to be handling a lot of cash or crypto? Or will they flip on you to stay out of prison? Read up on Matt Levine's many, many examples of people getting busted for insider trading.

Not sure how a random user of /r/WSB who has been receiving anonymous insider tips in return for 50% of the gains, to be paid in untraceable crypto, is going to "flip" :D

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

#295

Post by harry8 »

Bedon292 wrote: post #281
harry8 wrote: post #262

Earlier quoted context omitted.

Pelosi knows whether google are going to have a whole bunch of very expensive anti-monopoly regulation get up. She might even influence that. Her assessment of the prospects of competing regulation is non-public and could change when she has a shower. She is right in the non-public information /by/ /definition/. And when she says she won't let her family financial interests affect her judgement do you believe that? I…

I totally agree that they shouldn't trade stocks. Put it in a blind trust or something. There is all sorts of bias there in regulations or lack thereof. But what you have still not presented is evidence that inside information has actually been used to make those trade. Is it possible? Absolutely. But where is the proof behind your accusations? I have yet to see anyone produce actual proof, just speculation. Trading…

The onus is on a person with privileged information to show that they did not use that information to inform their trades. This is why the CEO can't trade whenever s/he feels like it, for example. "You can't prove I used inside information." To which the attitude is, sure, so what? You had access to it, you traded, get a lawyer. "Sure the CEO told me they were about to be acquired but you can't prove I used that information when I invested a few million in their company." And you really can't prove it yet prosecutions occur.

Pelosi and plenty of others have material, non public information. They and their partners trade knowing that material, non-public information. They make rather good returns, better than you. Better than your retirement savings. It STINKS to high heaven. Focus on that part and reforming it. It's not partisan it's not ok if you're an independent.

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

#296

Post by jliptzin »

kasey_junk wrote: post #268
55555 wrote: post #240

Earlier quoted context omitted.

1. Find out using inside information that Twilio is having a good quarter due to macro conditions 2. Buy deep OTM call options in… a similar company that’s in the same business as Twilio 3. Never get in any trouble

It’s literally a running gag on Matt Levite’s newsletter that all the SEC needs to do to keep their enforcement quota up is to search their database for any deep OTM option trades around earnings announcements.

If that’s the case couldn’t anyone just scan for suspicious trades like that and copy the position?

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

#297

Post by MichaelBurge »

lupire wrote: post #290
MichaelBurge wrote: post #267

Earlier quoted context omitted.

There are so many ways they could implement the same thing. K-mart could stop marking everything "on sale" 100% of the time and make the regular price the discounted price, so people don't feel like they're getting a good deal. Then their sales collapse and they go out of business, because consumers are robots with predictable emotions. Or the board could look for the absolute worst CEO they can find, thinking to the…

What your point? All of these cases are obvious frauds and the trading profit would be plenty of probable cause to investigate and convict.

They're only "obvious" frauds if I'm sitting here writing a paragraph describing it like one.

There is a global feed of press releases that companies release into, and the average HN commenter is incapable of distinguishing frauds from real better than anyone else. The executives that make these press releases use different language that doesn't describe it as fraudulent, and this makes it non-obvious.

If the "trading profit" is the only signal you have, I'm sure Goldman Sachs can come up with a way to make it less obvious than "buy lots of short-term expiring put options on your own company". You can't look at only the obvious case - you have to look at all possible things all finance people can do and rule out any possibility of profiting from a downwards movement that was engineered. Otherwise, they will profit from the gaps in your ability to detect them.

In order for something to be a crime, it has to be proven "beyond reasonable doubt". Say with 90% certainty. That is, 2 bits of certainty. But you can make a trading profit while leaking 1, 0.5, or 0.1 bits of certainty. It is extremely difficult for non-specialists to detect a trade pattern based on a leak of 0.1 bits of certainty.

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

#298

Post by refurb »

extr wrote: post #294
refurb wrote: post #270

Earlier quoted context omitted.

How do you get the profit into your hands? Cash? Bitcoin? Will this other person keep their mouth shut when the SEC comes knocking because some very successful traders seems to be handling a lot of cash or crypto? Or will they flip on you to stay out of prison? Read up on Matt Levine's many, many examples of people getting busted for insider trading.

Not sure how a random user of /r/WSB who has been receiving anonymous insider tips in return for 50% of the gains, to be paid in untraceable crypto, is going to "flip" :D

Crypto is not untraceable.

Crypto is useless unless converted into cash which requires identifying yourself.

Said WSBer could just take your tips and keep all the money.

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

#299

Post by mbesto »

lupire wrote: post #291
mbesto wrote: post #207

Earlier quoted context omitted.

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 le…

> 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, This is wrong. Being better than someone else doesn't make the playing field unlevel.

What he's saying is basically:

"The basketball court is level. The better basketball player simply has more money when it comes to financial markets."

Is a football field unlevel if team A spends more dollars on their lifting program?

> This is wrong.

P.S. Flat out telling people they are wrong is not a great way to facilitate good faith discussions.

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

#300

Post by kasey_junk »

jliptzin wrote: post #296
kasey_junk wrote: post #268

Earlier quoted context omitted.

It’s literally a running gag on Matt Levite’s newsletter that all the SEC needs to do to keep their enforcement quota up is to search their database for any deep OTM option trades around earnings announcements.

If that’s the case couldn’t anyone just scan for suspicious trades like that and copy the position?

Yes if they have the SEC database of trades?
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