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Six charged in Silicon Valley insider trading ring

sec.gov

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Re: Six charged in Silicon Valley insider trading ring

#81

Post by gamblor956 »

fny wrote: post #4

> 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…

In 2020, SCOTUS decided to limit the SEC's ability to impose disgorgement of profits sanctions, see Liu v SEC. https://www.supremecourt.gov/opinions/19pdf/18-1501_8n5a.pdf.

The rationale behind the decision was that disgorgement imposed joint and several liability rather than individual liabiity, and that disgorgement didn't take into account business expenses incurred in acquiring the illegally acquired income...

So now, the SEC has to determine disgorgement sanctions on a per-defendant basis, rather than assessing it as a single joint amount and making the wrong-doers go after each other for reimbursements.

Note though that the $700k are just the fines, not the disgorgement sanction, which will presumably be issued soon. (The $700k penalties are not treated as deductible expenses, so they're effectively on top of whatever disgorgement is ordered.)

Re: Six charged in Silicon Valley insider trading ring

#83

Post by Simulacra »

realist2001 wrote: post #28
qqtt wrote: post #2

I'm not sure if this is standard for SEC press releases, but why do they include details such as, "he was a school teacher" and, "he owed gambling debts"? I've always suspected the SEC investigations regarding things like insider trading are typically the opposite of justice and designed to go after the smallest possible players while giving the illusion of enforcement. And these details in an allegedly serious inves…

>> why do they include details such as, "he was a school teacher" and, "he owed gambling debts"? They want to signal to larger players (hedge funds, etc) that enforcement is only on smaller players like high school teachers. They are signaling to their rich friends and power brokers in NYC/Connecticut that there is nothing to worry about w/r/t to the real, bigtime insider trading. This comment is meant to be both sar…

Mayhaps to make the story more salacious?

Re: Six charged in Silicon Valley insider trading ring

#84

Post by ascagnel_ »

paulpauper wrote: post #46
fny wrote: post #4

> 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.

As other commenters have noted, the SEC doesn't have the power to bring criminal complaints; however, they do frequently refer such cases to the DoJ, which is in the process of bringing criminal complaints against three of the conspirators.

Re: Six charged in Silicon Valley insider trading ring

#85

Post by Simulacra »

JKCalhoun wrote: post #65

I'm still reeling from "six-figure gambling debt". Man, who are these people?

That is a shockingly high number. I think it's the same people in that meme things you realize when you're adult: More people do cocaine than you think. Gambling, drugs, OnlyFans, eventually debt adds up.

Re: Six charged in Silicon Valley insider trading ring

#86

Post by granshaw »

qqtt wrote: post #2

I'm not sure if this is standard for SEC press releases, but why do they include details such as, "he was a school teacher" and, "he owed gambling debts"? I've always suspected the SEC investigations regarding things like insider trading are typically the opposite of justice and designed to go after the smallest possible players while giving the illusion of enforcement. And these details in an allegedly serious inves…

I also found the "best friend" part to be strange – I expected language more like "close acquaintance" instead

Re: Six charged in Silicon Valley insider trading ring

#87

Post by WalterBright »

mgkimsal wrote: post #36
WalterBright wrote: post #24

Earlier 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?

I find human psychology interesting, like Cialdini's book on persuasion. It seems that people are generally bad at making rational risk/reward decisions, even well-educated ones. (This explains the popularity of lotteries, for example.)

Another way it's been put is people don't do fractions. They do not distinguish very well getting $10 as a reward vs getting $100. The same with gifts not being appreciated in proportion to the value of them - summed up in the phrase "it's the thought that counts."

I expect it's pretty much the same for penalties. I seriously doubt, for example, if a 1 year prison sentence does not deter, 5 years would.

Re: Six charged in Silicon Valley insider trading ring

#88

Post by jessaustin »

moron4hire wrote: post #47

So what was their mistake? Not including any US senators?

They didn't even have any company executives. The highest ranking manager was something called a "revenue recognition manager". Dude should have known that insider trading regulations are how chief executives punish defectors from their ongoing conspiracy against the investing public.

Re: Six charged in Silicon Valley insider trading ring

#89

Post by verbify »

jessaustin wrote: post #69
JumpCrisscross wrote: post #56

Earlier quoted context omitted.

> the only people who like it are the people high status enough to not be subject to it Everyone at the SEC is keenly aware that bagging a high-ranking financier is a ticket to higher office.

Can we come up with an example of an SEC official building upon an investigation of a "high-ranking financier" in order to obtain high office?

Not SEC, but US attorney for the Southern District Preet Bharara apparently made his fame by going after Wall Street bigwigs. I don't know much about him besides his Wikipedia page (which could be edited by a PR firm), but it seems that was his career trajectory.

Re: Six charged in Silicon Valley insider trading ring

#90

Post by pmoriarty »

paulpauper wrote: post #46
fny wrote: post #4

> 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.

Even if they did go to jail they'd likely get a short stint at a minimum security country club.

Meanwhile someone stealing a pack of chewing gum from a convenience store might get shot, and someone stealing a $500 TV could wind up serving hard time in a prison where they might get raped, tortured, or murdered.

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