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Was Someone Tipped Off to the LinkedIn Sale?
- secfirstmd 10y agoCorruption and allegations of insider trading amongst the banking sector? Surely not! Who would have thought?
- tobltobs 10y agoI think it is obvious that this trade did not originate from someone inside of the banking sector, else it would have been constructed in a "legal" way.
- jacquesm 10y agoAll it would take is for someone in on the deal to be having dinner with an associate and saying just a little bit too much. The walls have ears when you're dealing with stuff like this.
- NegativeK 10y agoWhen do insider trader laws kick in? I seem to remember that acting on information you overheard is legal; is being told info directly from the insider (if they don't benefit) also illegal?
- harryh 10y agoIn theory yes, the insider has to receive some sort of personal benefit for it to be illegal. In practice, however, the bar for "benefit" is very low. It's a bit of a legal grey area. https://www.bloomberg.com/view/articles/2016-01-19/justices-will-know-insider-trading-when-they-see-it https://www.bloomberg.com/view/articles/2016-01-19/justices-...
- rrauenza 10y agoLet's also recall that Congress is exempt: http://www.forbes.com/sites/kylesmith/2011/06/01/insider-trading-rules-that-dont-apply-to-congress/#689f82cef862 http://www.forbes.com/sites/kylesmith/2011/06/01/insider-tra...
- PeCaN 10y agoIn the clearest case, insider trading laws kick in when you bribe an insider for information. Acting on something you overhead, hiring a private investigator to see who's having lunch with who, etc, are all fair game; paying for an advantage in the market is not. It turns out to be way more complicated in practice though. It looks like the SEC just settles things on a case-by-case basis.
- JackFr 10y agoAccording Wikipedia, the firms advising on the deal, Qatalyst and Allen & Co, have about 50 and 175 employees respectively. It's far, far easier to keep things under wraps at places like that.
- qjighap 10y agoThe linked in 2012 breach started getting posted everywhere in weeks previous with high visibility. I don't believe it to be related, but I am sure someone may.
- JackFr 10y agoI really doubt it's someone in the banking or tech sector. Anyone with the a glancing familiarity with the stock market knows that's the easiest way to get caught.
- jonnathanson 10y agoThat's why it seems more likely (to me) to be tech sector than finance. Nobody in finance would make this kind of move. A LinkedIn or Microsoft employee might.
- nugget 10y agoMy understanding from dealing with this in a prior life is that the SEC will investigate these outliers as standard practice and 1) try to connect the dots between the buyers and any LNKD insiders, and 2) ask the buyers to show all of the due diligence and work product that went into deciding to make the trades. If you were the buyers and knew anyone with prior knowledge of the deal and couldn't document #2 in great depth then you are likely screwed. Presumably, anyone working in law or finance would know that this is standard practice and stay far away. Given how volatile LNKD's price has been over the last year, I could see these being legitimate trades (on the other hand, I actually took the other side of some Nov $160 covered calls and felt great about the hedge until this morning). Also keep in mind that these kinds of ''crazy'' trades are frequently placed as part of a larger more complex hedging strategy with net upside much lower than the numbers mentioned in the article.[1] [1] https://en.wikipedia.org/wiki/September_11_attacks_advance-knowledge_conspiracy_theories#Insider_trading https://en.wikipedia.org/wiki/September_11_attacks_advance-k...
- puke 10y agoA coworker told me that his brother once bought a large amount of stock in some company that had been down for a while because he "felt good about its future". He had (allegedly) no connection whatsoever to anyone in that company. The next day an announcement came out that the company was being acquired for a huge premium. Ended up having to deal with the SEC. He eventually came out in the clear, but it was still a huge hassle and caused him a lot of stress.
- xt00 10y agoGuaranteed this is insider trading if its a small time investor.. I've traded plenty of options, and no small time guy would buy more than $135k at 160 strike when closing price was 131 and the price of the stock for the past few months went as low as $100 -- and a time window of 2 months until the option expires?? Extremely risky trade.. very very likely you would lose all of that $135k.. the most common thing with options that close in like 2-3 months is that the stock just stays close to the same value, so you wait a little while and the stock doesn't go anywhere up or down, so you just have to sell your options at a loss.. but as that window of time closes to a few weeks and you are way out of the money like 160 vs. 131, then your ability to sell that option gets worse and worse until finally you sell it at like a 75% loss. The 175 strike option is even more ridiculous.. 175 on 131... man.. extremely extremely speculative... unless those traders have a history of making really risky bets like that, then they are almost assuredly in the know of what was going to happen. My bet is that they either live near Microsoft or Linked in locations (Seattle or SV).. Also the reason they placed the bid in the last 5 minutes of trading is that there are various auto-traders out there that chase this kind of action.. if they see really unusual buying of out of money options (extremely risky), then they buy a little too thinking that somebody must know something and they profit also.. so if they bought these in the last 5 minutes of trading, then its possible the algorithm might not pick up on the trend so it reduces the number of people jumping in blindly into the trade.. so they make the spike smaller, but also isolate themselves.. extremely risky.. so I think somebody is giving that money back that they made....
- exabrial 10y agoGood analysis, not sure why you got down voted by the hn police
- busterarm 10y agoMy boss is a former SEC investigator. We talk about this kind of trade a lot. Either somebody hit the lottery or this trade is crooked as hell.
- solotronics 10y agoI am genuinely curious how its possible to keep track of 'insider trading'. There is always information asymmetry and people will make decisions on that info, thats the entire premise of the market.
- rememberlenny 10y agoWasn't there a big LinkedIn hack recently? Would it be ridiculous to think these two are related?
- tmpanon1234act 10y agoWhat's really weird is that's way too small a profit to risk being flagged for insider trading.
- et2o 10y agoUnless that's all you can afford
- deleted 10y ago[deleted]
- astanway 10y agoBuying an abnormally large amount of short dated, out-of-the-money options is a textbook (and extremely rookie) insider trading move.
- matt_wulfeck 10y agoI'm having a hard time knowing they are simply a rookie. They prices the options right and bought in the last five minutes, so they at least know the type of resistance they'd encounter from algos.
- valdiorn 10y agoIt's a rookie trade because they left a bulldozer trail of evidence behind.
- princeb 10y agohttp://www.bloomberg.com/news/articles/2016-06-13/anatomy-of-linkedin-options-bet-that-probably-lost-money-chart http://www.bloomberg.com/news/articles/2016-06-13/anatomy-of... another look at this trade thinks its part of a short vol trade - this kind of trades lose money when the price moves too much too fast. the only way this structure would have made money if there was no announcement about anything - no announcement that there was an acq, or wasn't an acq, or there was any discussion about an acq at all.
- deleted 10y ago[deleted]
- known 10y agoInsider trading is NOT illegal; http://cnbc.com/id/43471561 http://cnbc.com/id/43471561
- truthlaidbear 10y agoIt's frowned upon, like masturbating on a plane.
- blastrat 10y agoI just want to add this bit of Finance Theory / Econ 101 to the mix, it's interesting: Markets function better (or really, they function at all, it's the definition) when prices are what they should be. Trading on insider information moves prices in the direction that they should be moving. The flaw in the pricing is due to the secret that's being kept, and the secret is being kept to protect insiders, not the public. So, as a counter example to "the tragedy of the commons", trading on inside information is an example of positive externalities surrounding trades with negative "internalities".