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I clarified my statement to say I don't have direct knowledge. But do you? I know they have compliance departments, but every town has law enforcement and yet c

I clarified my statement to say I don't have direct knowledge. But do you? I know they have compliance departments, but every town has law enforcement and yet crime still happens.

ng12 10y ago
I've worked in finance. Even if you're a ground-level shmuck without the means to insider trade you're still heavily regulated. Most firms require you to report investments and any trades you make as soon as you make them. Often the regulations extend to your immediate family as well. The only people I can imagine getting away with insider trading are those who don't have a direct connection to the business and trade amounts small enough that it's hard to prove. If you want hard data, in 2016 the SEC handed out $4B in fines: https://www.sec.gov/news/pressrelease/2016-212.html https://www.sec.gov/news/pressrelease/2016-212.html
- hackuser 10y ago
  Thanks for sharing your knowledge. But people still do it somehow; it can't be that effective a solution. > If you want hard data, in 2016 the SEC handed out $4B in fines Possibly a sign that it's still widespread; and the SEC can't catch everyone, so more must be going on.
tacostakohashi 10y ago
The SEC has a policy of splitting fines levied for insider trading (among other things) with informers: https://www.sec.gov/about/offices/owb/owb-tips.shtml https://www.sec.gov/about/offices/owb/owb-tips.shtml So, yes, I'd say that people with direct knowledge of actual insider trading have a strong incentive to report it. Quite different from petty crime in a town (or immigration), where nobody is really incentivized to do much about it until it gets really bad.
- hackuser 10y ago
  > people with direct knowledge of actual insider trading have a strong incentive to report it We're talking theoretically: Your point is one factor. Another is the profit from insider trading may far exceed the reward. Also, people who report it must become 'rats'; they risk sending their coworkers (and possibly friends) to jail, never working again on Wall Street, being completely ostracized socially and in the industry, and having the reputation of a traitor. But again, that's theoretical. I don't believe I know how it works in practice without some good inside sources.
  - ng12 10y ago
    Do you know how much Martha Stewart went to prison over? $45,763. And she was a wealthy, well connected celebrity. Risk v. reward skews heavily towards risk. As far as being a rat 1). you can face prosecution for being aware of insider trading without reporting it and 2). anyone who's convicted legally cannot work for any SEC regulated institution ever again. I'm sure some people do insider trading and get away with it, but some people also rob banks and get away with it. I just don't see any evidence pointing to the prosecution of it being lax.
    - hackuser 10y ago
      > Do you know how much Martha Stewart went to prison over? $45,763 That's just one example, and probably not a representative one, being a high-profile case. Sometimes they are made examples of. > Risk v. reward skews heavily towards risk. ... I just don't see any evidence pointing to the prosecution of it being lax. I don't see much evidence either way except for the SEC's billions in fines which someone cited above, which necessarily mean that it's happening in large volumes.

I clarified my statement to say I don't have direct knowledge. But do you? I know they have compliance departments, but every town has law enforcement and yet crime still happens.

ng12 10y ago

I've worked in finance. Even if you're a ground-level shmuck without the means to insider trade you're still heavily regulated. Most firms require you to report investments and any trades you make as soon as you make them. Often the regulations extend to your immediate family as well. The only people I can imagine getting away with insider trading are those who don't have a direct connection to the business and trade amounts small enough that it's hard to prove. If you want hard data, in 2016 the SEC handed out $4B in fines: https://www.sec.gov/news/pressrelease/2016-212.html https://www.sec.gov/news/pressrelease/2016-212.html

hackuser 10y ago
Thanks for sharing your knowledge. But people still do it somehow; it can't be that effective a solution. > If you want hard data, in 2016 the SEC handed out $4B in fines Possibly a sign that it's still widespread; and the SEC can't catch everyone, so more must be going on.

tacostakohashi 10y ago

The SEC has a policy of splitting fines levied for insider trading (among other things) with informers: https://www.sec.gov/about/offices/owb/owb-tips.shtml https://www.sec.gov/about/offices/owb/owb-tips.shtml So, yes, I'd say that people with direct knowledge of actual insider trading have a strong incentive to report it. Quite different from petty crime in a town (or immigration), where nobody is really incentivized to do much about it until it gets really bad.

hackuser 10y ago
> people with direct knowledge of actual insider trading have a strong incentive to report it We're talking theoretically: Your point is one factor. Another is the profit from insider trading may far exceed the reward. Also, people who report it must become 'rats'; they risk sending their coworkers (and possibly friends) to jail, never working again on Wall Street, being completely ostracized socially and in the industry, and having the reputation of a traitor. But again, that's theoretical. I don't believe I know how it works in practice without some good inside sources.
- ng12 10y ago
  Do you know how much Martha Stewart went to prison over? $45,763. And she was a wealthy, well connected celebrity. Risk v. reward skews heavily towards risk. As far as being a rat 1). you can face prosecution for being aware of insider trading without reporting it and 2). anyone who's convicted legally cannot work for any SEC regulated institution ever again. I'm sure some people do insider trading and get away with it, but some people also rob banks and get away with it. I just don't see any evidence pointing to the prosecution of it being lax.
  - hackuser 10y ago
    > Do you know how much Martha Stewart went to prison over? $45,763 That's just one example, and probably not a representative one, being a high-profile case. Sometimes they are made examples of. > Risk v. reward skews heavily towards risk. ... I just don't see any evidence pointing to the prosecution of it being lax. I don't see much evidence either way except for the SEC's billions in fines which someone cited above, which necessarily mean that it's happening in large volumes.