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Why Not Insider Trade on Every Company?

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Re: Why Not Insider Trade on Every Company?

#41

Post by ksherlock »

melvinmt wrote: post #16
nostromo wrote: post #5

It's actually still possible to perform a specific type of legal insider trading. Example: you are an executive at E Corp and the company will announce its acquisition in two months. You had previously set up planned trades to sell x number of shares each month before then. Because the acquisition is at a premium on the current price, you will make much less money if you go forward with your trades before the announc…

I would not get insider trading advice from Martha Stewart…

To be a pedant, Martha Stewart wasn't convicted of insider trading; she was convicted of obstruction of justice and making false statements, etc. Mark Cuban, facing similar circumstances, kept his mouth shut and stayed out of jail.

Re: Why Not Insider Trade on Every Company?

#42

Post by sjg007 »

rayiner wrote: post #38
stevewepay wrote: post #36

Earlier quoted context omitted.

Politicians in Congress are explicitly allowed to insider trade based on information they hear about. This is why congressmen's stock portfolios are far more profitable than an average person's.

It makes sense to insulate Congressman from insider trading charges. They are exposed to so much inside information that the executive could bring charges against them on a whim. Which would have significant separation of powers concerns. Of course, the answer to that is to require all Congressmen to put their assets in a blind trust.

What about public disclosure of their stock holdings?

Re: Why Not Insider Trade on Every Company?

#43

Post by raisincakes »

bbcbasic wrote: post #32

Then there is the story of the really sophisticated guys who didn't get caught. Unfortunately that's a story you won't be reading online, but will just have to imagine. It really makes me question the sanity of doing this illegal trading. For as much effort you could do something legal and make money. Maybe not as much but surely without the risk of going to prison.

Sadly, insider trading is pervasive on wall street. You don't read about the guys that don't get caught, and there are a lot of them. Remember, if you can't spot the sucker at the table, you're the sucker. That's why I keep my money far away from the stock market except for index funds.

Re: Why Not Insider Trade on Every Company?

#44

Post by juliangregorian »

ZoFreX wrote: post #35
mtsmith85 wrote: post #4

Earlier quoted context omitted.

I love reading Matt Levine's writing; I enjoy the humorous tone. A bit of Louis CK for the financial world. But I didn't get that he was dismissing the security concerns. I read it as he was dismissing the idea that some aspects of the hacking could have been more easily thwarted. For example, two factor authentication is a relatively straightforward protection. Now he may have been underselling how complex it is to…

2 factor authentication has nothing to do with this, though, and would do absolutely nothing to protect against this occurrence or similar ones. 2 factor authentication is great in certain situations... but only when your code is operating correctly. If someone has achieved arbitrary code execution (even if only at the SQL layer) it's game over. 2FA won't save you.

Did you read the article? Not only was sql injection found, logins were brute forced. 2fa absolutely would have helped with that.

Re: Why Not Insider Trade on Every Company?

#45

Post by thefreeman »

ZoFreX wrote: post #35
mtsmith85 wrote: post #4

Earlier quoted context omitted.

I love reading Matt Levine's writing; I enjoy the humorous tone. A bit of Louis CK for the financial world. But I didn't get that he was dismissing the security concerns. I read it as he was dismissing the idea that some aspects of the hacking could have been more easily thwarted. For example, two factor authentication is a relatively straightforward protection. Now he may have been underselling how complex it is to…

2 factor authentication has nothing to do with this, though, and would do absolutely nothing to protect against this occurrence or similar ones. 2 factor authentication is great in certain situations... but only when your code is operating correctly. If someone has achieved arbitrary code execution (even if only at the SQL layer) it's game over. 2FA won't save you.

they also brute forced employee accounts (likely the sql injection was in the employee facing section of the site)

Re: Why Not Insider Trade on Every Company?

#46

Post by mslate »

stevewepay wrote: post #36
nostromo wrote: post #5

It's actually still possible to perform a specific type of legal insider trading. Example: you are an executive at E Corp and the company will announce its acquisition in two months. You had previously set up planned trades to sell x number of shares each month before then. Because the acquisition is at a premium on the current price, you will make much less money if you go forward with your trades before the announc…

Politicians in Congress are explicitly allowed to insider trade based on information they hear about. This is why congressmen's stock portfolios are far more profitable than an average person's.

Do you have any source data?

Re: Why Not Insider Trade on Every Company?

#47

Post by coldtea »

rayiner wrote: post #38
stevewepay wrote: post #36

Earlier quoted context omitted.

Politicians in Congress are explicitly allowed to insider trade based on information they hear about. This is why congressmen's stock portfolios are far more profitable than an average person's.

It makes sense to insulate Congressman from insider trading charges. They are exposed to so much inside information that the executive could bring charges against them on a whim. Which would have significant separation of powers concerns. Of course, the answer to that is to require all Congressmen to put their assets in a blind trust.

>It makes sense to insulate Congressman from insider trading charges. They are exposed to so much inside information that the executive could bring charges against them on a whim. Which would have significant separation of powers concerns.

How about disallowing them to trade altogether in the first place for as long as they hold office?

Re: Why Not Insider Trade on Every Company?

#48

Post by acconsta »

jedberg wrote: post #27
nomailing wrote: post #18

I am wondering if this centralized infrastructure for financial news is actually a good idea. This could always happen again and again. All the employees in these news companies could get a mass of insider information which they could sell. Isn't maybe an alternative decentralized news publishing service a better idea? Couldn't the CEO of a company publish their financial news only on their own website at the given p…

> Why is it necessary for these news to be stored in some central news database Amusingly it's because of the hedge funds. They want to have a limited list of places to check for news to make sure no one gets there ahead of them. This is why they were so upset when the Netflix CEO made something public on Facebook -- because they weren't watching his Facebook page for news (but they sure are now!). The SEC actually h…

I mean, hedge funds have the resources to monitor thousands of websites. Joe Retail Investor doesn't. Reg FD was introduced to level the playing field.

Re: Why Not Insider Trade on Every Company?

#49

Post by patio11 »

stcredzero wrote: post #26
nostromo wrote: post #5

It's actually still possible to perform a specific type of legal insider trading. Example: you are an executive at E Corp and the company will announce its acquisition in two months. You had previously set up planned trades to sell x number of shares each month before then. Because the acquisition is at a premium on the current price, you will make much less money if you go forward with your trades before the announc…

What was that about how most problems in Computer Science can be solved with an additional level of indirection? Maybe the same is true for Insider Trading? Instead of buying options on the stock of a company, use options on the stock of another company that owns options on the 1st company. Perhaps derivatives have gotten so complicated in recent years as a means of hiding insider trading? (Perhaps there are quants w…

use options on the stock of another company that owns options on the 1st company

Not viable -- think how many options e.g. Google would have to own on e.g. Microsoft to meaningfully move the needle at Google.

I think you're right overall, though. "Buy exposure to a symbol you are not allowed to trade in." is easy if a) there exists an ETF which you are allowed to trade in, b) you know what the constituents of the ETF are and what their weighting is (trivial), c) you can program a computer to successfully do 4th grade math, d) you are good at trade execution (highly non-trivial).

Re: Why Not Insider Trade on Every Company?

#50

Post by gnopgnip »

pbreit wrote: post #28

Would it be so bad if insider trading laws just went away? Information is spreading faster than ever. So a few Mak outsized gains on some inside info. Is it that big a deal?

Insider trading is taking advantage of the rest of the market. If there was nothing done to prevent it, it could cause prevent many investors from entering the market.
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