It’s amazing the SEC is able to find the stuff out. It’s like what happen with Josh Chassion at Facebook. Eventually leaking confidential data is going to get you in trouble, and maybe jail, but people still do it.
Six charged in Silicon Valley insider trading ring
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Re: Six charged in Silicon Valley insider trading ring
#42Earlier quoted context omitted.
> I bet you it’d stop happening You'd lose that bet. The death penalty didn't stop pickpocketing, or any other crimes, for that matter. People just don't work like that. Constantly ratcheting up the penalties starts moving into medieval territory rather quickly.
> The death penalty didn't stop ... Are you sure? How would you be sure? If there's even a few people who've come close to committing a crime, then considered the punishment (prison/execution), then decided against the crime... isn't that "stopping" it?
> Are you sure?
Since people kept getting hung for pickpocketing, the thread obviously failed to deter them.
> isn't that "stopping" it?
Reduce it, maybe, but not stopping it.
Re: Six charged in Silicon Valley insider trading ring
#43> Using sophisticated data analysis Curious what that entails. Does the SEC have some automated alerting of suspiciously well timed trades?
SEC and FINRA invest a lot in Data Analytics. Go to https://technology.finra.org/tech.html and you'll see that they use the same tools as the internet industry.
Re: Six charged in Silicon Valley insider trading ring
#44The SEC is the HR department of hedge funds. (i.e. it exists to protect hedge fund managers)
There's systemic corruption at the highest levels, but the SEC decides to go after a handful of little guys. The next French Revolution is a ticking time-bomb.
Re: Six charged in Silicon Valley insider trading ring
#45glad the sec spends all its time on 6 randos rather than meme stocks, scam chinese education companies, nft/crypto, scam spacs, tesla, etc… definitely have their priorities right
The stock market should be an honest unregulated casino. Don’t invest if you can’t afford to lose it all should be the name of the game.
It really shouldn't.
At a societal level, the point of having a stock market at all is to increase the amount of investment capital available. An unregulated market where people are at significant risk of big losses due to crime, fraud, etc is one that will not attract nearly as much capital. Less investment capital means less growth and a poorer society.
As proof that regulation is valuable, look at all of the foreign companies that list on the US's highly regulated markets. They are willing to meet US transparency and accountability standards because that's how they get lots of cheap capital. In other words, the marketplace of marketplaces proves the value of highly regulated public markets.
Re: Six charged in Silicon Valley insider trading ring
#46> Bannon agreed to pay a civil penalty of $281,497, Rauch agreed to pay a civil penalty of $128,230, and Ramaiya agreed to pay a civil penalty of $65,780. Sood also consented to the entry of a final judgment and agreed to pay a civil penalty of $178,320. So the SEC claims they found $1.7M in insider trading, and they only collect $700K. This assumes the ring didn't do more. No wonder bigger players do this in size. W…
If guilty, it's a joke that they only have to pay a penalty instead of going to jail. It means it's rational for everyone to try insider trading at least once, knowing that if you fail the worst that can hapepn is you lose your profits.
Re: Six charged in Silicon Valley insider trading ring
#47So what was their mistake? Not including any US senators?
Re: Six charged in Silicon Valley insider trading ring
#48Covered in Matt Levine today and highlights some details:
https://www.bloomberg.com/opinion/articles/2021-06-16/don-t-...
Such as:
Shortly after seeing the screenshot of Wylam’s account on July 28, Brown called Wylam on the telephone. During the call, Wylam explained how he made such large profits purchasing Infinera put options before the July 27 announcement. Brown “flipped out” because, in his view, the massive size of Wylam’s trades and profits raised an “obvious red flag.”
Re: Six charged in Silicon Valley insider trading ring
#49> Brown ... repeatedly tipped ... to his best friend Wylam ... Wylam ... traded on this information and also tipped Sood .. Sood traded on this information and tipped his three friends also illegally traded on the information.
(edited for brevity)
So it sounds like Brown texted his bestie something he shouldn't have. Bestie then passed it on to people who made lot of money on it. The SEC, through some combination of SQL select statements and creative greps managed to nab the bigger idiots and follow them back to the source. Everyone who obviously violated the law by trading on info they shouldn't have has settled and the SEC is still trying to nail Brown.
Since Brown didn't trade I fail to see where he violated the law. Contractual obligations with his employer maybe. Regulatory requirements maybe. But you generally need to trade or have reason to suspect that someone will trade in order to insider trade.
Edit: by "the law" I mean the subsection of 10b that the SEC release implies the whole crew violated. Not some unrelated regulatory law.
Re: Six charged in Silicon Valley insider trading ring
#50For anything worth securing we have security engineered into it, like passwords, encryption what not. But for insider trading we are just supposed to assume that the players play right without any checks or balances? I don't think just the SEC is sufficient to prevent this.
I was on a call last week about the SEC’s changing priorities under Chairperson Gensler and the consensus among all of the attorneys on the call was that they will be more data-driven and have already been using data analytics far more extensively than ever before. I suspect the case in the linked release came about from those efforts: > “Using sophisticated data analysis, the SEC was able to uncover this insider tra…
Is there somewhere that I could read more about the analytics used to catch insider trading?