5 ms·

FTA: "None of the filings lists the transactions as being part of 10b5-1 pre-scheduled trading plans." Anyone with more knowledge: How normal is this sort of b

FTA: "None of the filings lists the transactions as being part of 10b5-1 pre-scheduled trading plans." Anyone with more knowledge: How normal is this sort of behaviour?

ringaroundthetx 9y ago
Pretty normal. Their lawyers likely said that as long as they reported in (via Form 3 and Form 4) then it would be complaint enough. So this was still transparency, and its just fodder for reporters to debate about, because without the Form 3 and Form 4 regulation, you would never know. Cost benefit analysis.
- stygiansonic 9y ago
  So, does this mean just the transparency via regulatory filings is enough to absolve them of any legal liability?
  - jdmichal 9y ago
    It means that someone from the SEC should probably be looking into the trades. It would take a court to decide any legal liability, and charges would be the result of such SEC action. Having not reported the transactions in the first place would have likely made the sales less defensible -- good ol' "why were they hiding if they aren't guilty?"
    - icantdrive55 9y ago
      It looks like this is the way to get around SEC laws. 1. Have a large stock/hedgefund/whatever company. Kinda like Steve Cohen at SAC. 2. Hire hungry employees to take the risk of getting/profiting from Insider Information. (Yes--there are a thousands of Series 7 sociopaths that will do anything to get ahead--including spending a few years at the locked up federal Resort. "Just make money. Happy boss happy life! Plus--how do I keep the out of my league Professional Shopper happy? Really dude?" 3. As long as the head honcho doesn't know exactly where the sociopath got the stock tip, he can claim plausible deniability on his winning wad. It helps to have an army of good lawyers, and very deep pockets. 4. Pay some expected civil penalties, but stay clear of Criminal Conviction. Keep that privilege to steal. That's what's important. 5. Keep your license, and go back to the game of exploiting a rigged system. 6. I'm talking about guys like Steve Cohen. (In my mind, it looks like as long as you can't be directly tied to the insider tip; you Win! Yea--for the boys! Yea--for having money to buy your right to win!). 7. In all honestly, the only real money my deceased father made on the stock market was over a tip at Thanksgiving giving after his daughter's father and in-law got drunk and told him to invest in his company. This was twenty years ago. My father was a vocal critic of anyone who cheated the system. He stopped with his chest beating holier than thou speaches after that trade. (I don't even think my dad saw it as insider trading that night. It was a few months later it hit him. I knew, but I knew my father desperately needed some viable stock tips. Tips that most guys throw around--especially the successful Traders. https://www.ft.com/content/efda2ca2-ec69-11e6-930f-061b01e23655 https://www.ft.com/content/efda2ca2-ec69-11e6-930f-061b01e23...
- abalone 9y ago
  Uh, what? As another comment noted, they possessed "material non-public information" when they traded. Forms 3-5 just disclose the transaction, not the non-public information that we all just learned about. This doesn't mean they are guilty of insider trading, especially if there is a pattern of recent sales, but it certainly doesn't absolve them. Definitely smarter to hold off on ad hoc trades until all material information goes public -- or go with a scheduled plan.
  - ringaroundthetx 9y ago
    here are the sells http://google.brand.edgar-online.com/?sym=EFX http://google.brand.edgar-online.com/?sym=EFX All of the guys in question all own 40,000 more shares than the few thousand they sold. Doesn't mean they weren't insider trading or avoiding losses, its a good defense though. Selling outside of a predefined schedule is always at risk of some scrutiny, because they always have inside information. Given the size of these sells, they probably need it to cover a margin call, since its common for people to borrow against their shares. Would suck if thats what it was because its damning for civil and criminal liability and would have been likely necessary for their solvency. Enjoy
khuey 9y ago
Securities laws in the United States prohibit trades made with "material non-public information". A 10b5-1 plan is an affirmative defense to insider trading. The basic idea is that before you get access to material non-public information, you decide "I want to buy/sell X shares on the second Tuesday of every month" or similar. Because the trades are made in a way that was determined before you had access to material non-public information, this is not considered insider trading. (IANAL, this is not legal advice, etc etc)
- jzwinck 9y ago
  What if you cancel the planned trades when you learn of some coming news that disadvantages them?
  - ericseppanen 9y ago
    This is a loophole that exists, yes. 10b5-1 plans set up by the company will sometimes have a rule that no changes are allowed for 30 days, which solves the problem. Not sure how widespread this practice is.
  - Dobbs 9y ago
    There are rules about amending your plans. My company has trading windows (a month or two after earnings, window open for around three weeks) for when people above a certain level are allowed to make trades. Even higher level employees must have a trading plan. You can only modify your trading plan during the trading window and there are restrictions and limits on how you can modify it and if you need permission to modify it. Or something along those lines, I'm not high enough level to have to deal with the specifics so I only know the generalities I picked up while trying to determine if I needed to care.
    - icelancer 9y ago
      You may have to produce your research or justification for modifying your plans, or selling outside of those scheduled plans. Most attorneys and financial experts will strongly advise you to document every minutia around all changes, no matter how innocuous.

FTA: "None of the filings lists the transactions as being part of 10b5-1 pre-scheduled trading plans." Anyone with more knowledge: How normal is this sort of behaviour?

ringaroundthetx 9y ago

Pretty normal. Their lawyers likely said that as long as they reported in (via Form 3 and Form 4) then it would be complaint enough. So this was still transparency, and its just fodder for reporters to debate about, because without the Form 3 and Form 4 regulation, you would never know. Cost benefit analysis.

stygiansonic 9y ago
So, does this mean just the transparency via regulatory filings is enough to absolve them of any legal liability?
- jdmichal 9y ago
  It means that someone from the SEC should probably be looking into the trades. It would take a court to decide any legal liability, and charges would be the result of such SEC action. Having not reported the transactions in the first place would have likely made the sales less defensible -- good ol' "why were they hiding if they aren't guilty?"
  - icantdrive55 9y ago
    It looks like this is the way to get around SEC laws. 1. Have a large stock/hedgefund/whatever company. Kinda like Steve Cohen at SAC. 2. Hire hungry employees to take the risk of getting/profiting from Insider Information. (Yes--there are a thousands of Series 7 sociopaths that will do anything to get ahead--including spending a few years at the locked up federal Resort. "Just make money. Happy boss happy life! Plus--how do I keep the out of my league Professional Shopper happy? Really dude?" 3. As long as the head honcho doesn't know exactly where the sociopath got the stock tip, he can claim plausible deniability on his winning wad. It helps to have an army of good lawyers, and very deep pockets. 4. Pay some expected civil penalties, but stay clear of Criminal Conviction. Keep that privilege to steal. That's what's important. 5. Keep your license, and go back to the game of exploiting a rigged system. 6. I'm talking about guys like Steve Cohen. (In my mind, it looks like as long as you can't be directly tied to the insider tip; you Win! Yea--for the boys! Yea--for having money to buy your right to win!). 7. In all honestly, the only real money my deceased father made on the stock market was over a tip at Thanksgiving giving after his daughter's father and in-law got drunk and told him to invest in his company. This was twenty years ago. My father was a vocal critic of anyone who cheated the system. He stopped with his chest beating holier than thou speaches after that trade. (I don't even think my dad saw it as insider trading that night. It was a few months later it hit him. I knew, but I knew my father desperately needed some viable stock tips. Tips that most guys throw around--especially the successful Traders. https://www.ft.com/content/efda2ca2-ec69-11e6-930f-061b01e23655 https://www.ft.com/content/efda2ca2-ec69-11e6-930f-061b01e23...
abalone 9y ago
Uh, what? As another comment noted, they possessed "material non-public information" when they traded. Forms 3-5 just disclose the transaction, not the non-public information that we all just learned about. This doesn't mean they are guilty of insider trading, especially if there is a pattern of recent sales, but it certainly doesn't absolve them. Definitely smarter to hold off on ad hoc trades until all material information goes public -- or go with a scheduled plan.
- ringaroundthetx 9y ago
  here are the sells http://google.brand.edgar-online.com/?sym=EFX http://google.brand.edgar-online.com/?sym=EFX All of the guys in question all own 40,000 more shares than the few thousand they sold. Doesn't mean they weren't insider trading or avoiding losses, its a good defense though. Selling outside of a predefined schedule is always at risk of some scrutiny, because they always have inside information. Given the size of these sells, they probably need it to cover a margin call, since its common for people to borrow against their shares. Would suck if thats what it was because its damning for civil and criminal liability and would have been likely necessary for their solvency. Enjoy

khuey 9y ago

Securities laws in the United States prohibit trades made with "material non-public information". A 10b5-1 plan is an affirmative defense to insider trading. The basic idea is that before you get access to material non-public information, you decide "I want to buy/sell X shares on the second Tuesday of every month" or similar. Because the trades are made in a way that was determined before you had access to material non-public information, this is not considered insider trading. (IANAL, this is not legal advice, etc etc)

jzwinck 9y ago
What if you cancel the planned trades when you learn of some coming news that disadvantages them?
- ericseppanen 9y ago
  This is a loophole that exists, yes. 10b5-1 plans set up by the company will sometimes have a rule that no changes are allowed for 30 days, which solves the problem. Not sure how widespread this practice is.
- Dobbs 9y ago
  There are rules about amending your plans. My company has trading windows (a month or two after earnings, window open for around three weeks) for when people above a certain level are allowed to make trades. Even higher level employees must have a trading plan. You can only modify your trading plan during the trading window and there are restrictions and limits on how you can modify it and if you need permission to modify it. Or something along those lines, I'm not high enough level to have to deal with the specifics so I only know the generalities I picked up while trying to determine if I needed to care.
  - icelancer 9y ago
    You may have to produce your research or justification for modifying your plans, or selling outside of those scheduled plans. Most attorneys and financial experts will strongly advise you to document every minutia around all changes, no matter how innocuous.