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Fiction or not, this is similar to an actual story of (ex)-fraud researchers at Capital One[1], who (ab)used their access to credit card transaction data in ord

Fiction or not, this is similar to an actual story of (ex)-fraud researchers at Capital One[1], who (ab)used their access to credit card transaction data in order to infer whether target companies' quarterly earnings would be below/above expectations, and then traded on that knowledge. However, in the actual story, there was no "black box" to query, the ex-employees wrote all the complicated queries themselves. EDIT: They turned ~$150K into ~$2.8 MM USD over about three years, before being caught, mostly through options trades it seems. 1. http://www.bloombergview.com/articles/2015-01-23/capital-one-fraud-researchers-may-also-have-done-some-fraud http://www.bloombergview.com/articles/2015-01-23/capital-one...

carsonreinke 11y ago
Can someone explain why this is illegal (besides any data/privacy breach within Capital One)?
- ojbyrne 11y ago
  It's in the article: 'The "misappropriation theory" holds that a person commits fraud "in connection with" a securities transaction, and thereby violates § 10(b) and Rule 10b-5, when he misappropriates confidential information for securities trading purposes, in breach of a duty owed to the source of the information. ... Under this theory, a fiduciary's undisclosed, self-serving use of a principal's information to purchase or sell securities, in breach of a duty of loyalty and confidentiality, defrauds the principal of the exclusive use of that information. In lieu of premising liability on a fiduciary relationship between company insider and purchaser or seller of the company's stock, the misappropriation theory premises liability on a fiduciary-turned-trader's deception of those who entrusted him with access to confidential information.'
- carsonreinke 11y ago
  Oh, duh, it explains it in the article: "misappropriation" insider trading
- stygiansonic 11y ago
  The answer is right in the article linked: "People have asked me if this is insider trading and, you know, sure it is? (If the allegations are true, I mean.) This is not "classical" insider trading -- trading or tipping by an insider at Chipotle or whatever -- but rather "misappropriation" insider trading..."
- GreaterFool 11y ago
  Possibly something to do with privileged information. Keep in mind that even things such as intent may get you on the wrong side of the line* * example: you post a trade but you don't intend to execute it but instead hope to fool the market, then you cancel the trade and switch to other direction. forgot what that's called exactly
  - cholmon 11y ago
    https://en.wikipedia.org/wiki/Pump_and_dump https://en.wikipedia.org/wiki/Pump_and_dump
- downandout 11y ago
  The employees involved here broke the law by obtaining the information. However, if they had simply gone to a hedge fund without telling them where they worked, and said, "here are our predictions of these stocks, if you like the results, pay us and we'll give you more predictions," the hedge fund could have traded on it and that would not have been illegal for them to do because they had no knowledge of the actual source of the information. The employees stealing the information would have still been liable. But had they simply accepted payment from the hedge fund in Bitcoin and not revealed their true identities to the hedge fund, they would have been much harder to find and prosecute.
basch 11y ago
It sounds like a retelling of this story from a decade ago. But then on September 6, 1997, something quite extraordinary happened: the graph shot upwards, recording a sudden and massive shift in the number sequence as his machines around the world started reporting huge deviations from the norm. The day was of historic importance for another reason, too. For it was the same day that an estimated one billion people around the world watched the funeral of Diana, Princess of Wales at Westminster Abbey. http://www.rense.com/general62/bbox.htm http://www.rense.com/general62/bbox.htm http://noosphere.princeton.edu/ http://noosphere.princeton.edu/ https://science.slashdot.org/story/05/02/12/2344224/random-number-generator-that-sees-into-the-future https://science.slashdot.org/story/05/02/12/2344224/random-n... http://msgboard.snopes.com/cgi-bin/ultimatebb.cgi?ubb=print_topic;f=106;t=000934 http://msgboard.snopes.com/cgi-bin/ultimatebb.cgi?ubb=print_...
- basch 11y ago
  I forgot how impressive http://noosphere.princeton.edu http://noosphere.princeton.edu is, quite a bit of work. Science or quackery, it gives me an xfiles "i want to believe" feeling. it is still running, here is the data chart from monday http://noosphere.princeton.edu/data/eggsummary/2016/summary-2016-03-21.html http://noosphere.princeton.edu/data/eggsummary/2016/summary-... https://en.wikipedia.org/wiki/Global_Consciousness_Project https://en.wikipedia.org/wiki/Global_Consciousness_Project
- fsiefken 11y ago
  There is a spike just after the Paris 20151113 attacks. I wonder if there will be a spike in the 20160322-23 data. For some odd reason the data just after the Charlie Hebdo attacks 8-9 January 2015 is gone. There are more gaps. https://www.heartmath.org/research/global-coherence/gcms-live-data/ https://www.heartmath.org/research/global-coherence/gcms-liv...

carsonreinke 11y ago

Can someone explain why this is illegal (besides any data/privacy breach within Capital One)?

ojbyrne 11y ago
It's in the article: 'The "misappropriation theory" holds that a person commits fraud "in connection with" a securities transaction, and thereby violates § 10(b) and Rule 10b-5, when he misappropriates confidential information for securities trading purposes, in breach of a duty owed to the source of the information. ... Under this theory, a fiduciary's undisclosed, self-serving use of a principal's information to purchase or sell securities, in breach of a duty of loyalty and confidentiality, defrauds the principal of the exclusive use of that information. In lieu of premising liability on a fiduciary relationship between company insider and purchaser or seller of the company's stock, the misappropriation theory premises liability on a fiduciary-turned-trader's deception of those who entrusted him with access to confidential information.'
carsonreinke 11y ago
Oh, duh, it explains it in the article: "misappropriation" insider trading
stygiansonic 11y ago
The answer is right in the article linked: "People have asked me if this is insider trading and, you know, sure it is? (If the allegations are true, I mean.) This is not "classical" insider trading -- trading or tipping by an insider at Chipotle or whatever -- but rather "misappropriation" insider trading..."
GreaterFool 11y ago
Possibly something to do with privileged information. Keep in mind that even things such as intent may get you on the wrong side of the line* * example: you post a trade but you don't intend to execute it but instead hope to fool the market, then you cancel the trade and switch to other direction. forgot what that's called exactly
- cholmon 11y ago
  https://en.wikipedia.org/wiki/Pump_and_dump https://en.wikipedia.org/wiki/Pump_and_dump
downandout 11y ago
The employees involved here broke the law by obtaining the information. However, if they had simply gone to a hedge fund without telling them where they worked, and said, "here are our predictions of these stocks, if you like the results, pay us and we'll give you more predictions," the hedge fund could have traded on it and that would not have been illegal for them to do because they had no knowledge of the actual source of the information. The employees stealing the information would have still been liable. But had they simply accepted payment from the hedge fund in Bitcoin and not revealed their true identities to the hedge fund, they would have been much harder to find and prosecute.

basch 11y ago

It sounds like a retelling of this story from a decade ago. But then on September 6, 1997, something quite extraordinary happened: the graph shot upwards, recording a sudden and massive shift in the number sequence as his machines around the world started reporting huge deviations from the norm. The day was of historic importance for another reason, too. For it was the same day that an estimated one billion people around the world watched the funeral of Diana, Princess of Wales at Westminster Abbey. http://www.rense.com/general62/bbox.htm http://www.rense.com/general62/bbox.htm http://noosphere.princeton.edu/ http://noosphere.princeton.edu/ https://science.slashdot.org/story/05/02/12/2344224/random-number-generator-that-sees-into-the-future https://science.slashdot.org/story/05/02/12/2344224/random-n... http://msgboard.snopes.com/cgi-bin/ultimatebb.cgi?ubb=print_topic;f=106;t=000934 http://msgboard.snopes.com/cgi-bin/ultimatebb.cgi?ubb=print_...

basch 11y ago
I forgot how impressive http://noosphere.princeton.edu http://noosphere.princeton.edu is, quite a bit of work. Science or quackery, it gives me an xfiles "i want to believe" feeling. it is still running, here is the data chart from monday http://noosphere.princeton.edu/data/eggsummary/2016/summary-2016-03-21.html http://noosphere.princeton.edu/data/eggsummary/2016/summary-... https://en.wikipedia.org/wiki/Global_Consciousness_Project https://en.wikipedia.org/wiki/Global_Consciousness_Project
fsiefken 11y ago
There is a spike just after the Paris 20151113 attacks. I wonder if there will be a spike in the 20160322-23 data. For some odd reason the data just after the Charlie Hebdo attacks 8-9 January 2015 is gone. There are more gaps. https://www.heartmath.org/research/global-coherence/gcms-live-data/ https://www.heartmath.org/research/global-coherence/gcms-liv...