7 ms·

The law doesn't care how stupid your plan was. You could plan a theft in the middle of the day stealing $5 and still be a crime Insider trading is trading with

by volgo 9y ago

The law doesn't care how stupid your plan was. You could plan a theft in the middle of the day stealing $5 and still be a crime Insider trading is trading with the knowledge of privileged information not available to public investors. If he did it, it's a crime. Doesn't matter if he made $50 million or $5.

meritt 9y ago
https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001538580 https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&C... Their CEO has a well-documented six-year history of acquiring and disposing INTC stock. As the CEO, he implicitly always has access to privileged information. How exactly does the SEC determine the legality of a specific trade? I'm not trying to be flip here, I don't really have an opinion on the matter. It just seems that when the CEO is allowed to apparently buy/sell as they please, and not on a predetermined announced-in-advance plan, you could argue that every single trade was illegal insider trading.
- URSpider94 9y ago
  Most corporations have special departments in place to “pre-clear” executive trades. He almost certainly has a pre-clearance opinion letter on file authorizing him to proceed.
- crdoconnor 9y ago
  When it was the Qwest CEO the legality appears to have been determined by his lack of cooperation with the NSA: http://www.businessinsider.com/the-story-of-joseph-nacchio-and-the-nsa-2013-6?IR=T http://www.businessinsider.com/the-story-of-joseph-nacchio-a...
- friendzis 9y ago
  Another side of the same coin would be that since CEO "implicitly always has access to privileged information", it is up to trader to prove legality of specific trade. Of course this is against innocent unless proven otherwise dogma, but still perfectly valid different side of the coin. Which I find amusing. This is just one of the many places where legality of an action greatly depends on consensus and established practices, which can change overnight. For example court ruling based on implicitness of access to privileged information would effectively eliminate high ranking officers from trading altogether.
baddox 9y ago
Insiders are still allowed to trade, they’re just not allowed to trade on the insider knowledge.
- deleted 9y ago
  [deleted]
T2_t2 9y ago
If he sells shares the day they vest, year after year, the only question then is about volume. Did he sell a larger volume than usual? That's a VERY different question to a binary "is it insider trading?"
- URSpider94 9y ago
  Nope, that’s not necessarily true. The test is whether he, or any other actor, gave the order to sell while in possession of material information. It’s possible to put an advance order in place to sell shares on a plan, which clears the issue because that decision is made in advance.
  - pathseeker 9y ago
    >It’s possible to put an advance order in place to sell shares on a plan, which clears the issue because that decision is made in advance. That's what he did, no?
    - sudhirj 9y ago
      Only time, not number. The schedule allows for a sale on pre determined days, and on the day in question, after he had the news, he sold every share he legally could - way more than he usually did on the scheduled days.
    - josefx 9y ago
      He broke his pattern last year by changing the orders in october. At a time intel was already aware of Meltdown and with a puplication date for the vulnerability set in January. Wikipedia states that the issue had been shared with manufacturers in July, a month after he normally issues his orders mentioned by the article. Edit: The date on the last part is wrong, which doesn't change the fact that he changed his orders in the time between internal and public disclosure of Meltdown. I misread the article, in 2017 he issued his orders in February not June (2015).
  - T2_t2 9y ago
    I posted this, but I have no idea how to interpret it: https://news.ycombinator.com/item?id=16104426 https://news.ycombinator.com/item?id=16104426 - the numbers make no sense to me.
tc313 9y ago
It has to be material inside informtion in order to be considered insider trading. He can argue that the small dip in the stock price after the news was released is evidence that the information was not material.

by volgo 9y ago

meritt 9y ago

https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001538580 https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&C... Their CEO has a well-documented six-year history of acquiring and disposing INTC stock. As the CEO, he implicitly always has access to privileged information. How exactly does the SEC determine the legality of a specific trade? I'm not trying to be flip here, I don't really have an opinion on the matter. It just seems that when the CEO is allowed to apparently buy/sell as they please, and not on a predetermined announced-in-advance plan, you could argue that every single trade was illegal insider trading.

URSpider94 9y ago
Most corporations have special departments in place to “pre-clear” executive trades. He almost certainly has a pre-clearance opinion letter on file authorizing him to proceed.
crdoconnor 9y ago
When it was the Qwest CEO the legality appears to have been determined by his lack of cooperation with the NSA: http://www.businessinsider.com/the-story-of-joseph-nacchio-and-the-nsa-2013-6?IR=T http://www.businessinsider.com/the-story-of-joseph-nacchio-a...
friendzis 9y ago
Another side of the same coin would be that since CEO "implicitly always has access to privileged information", it is up to trader to prove legality of specific trade. Of course this is against innocent unless proven otherwise dogma, but still perfectly valid different side of the coin. Which I find amusing. This is just one of the many places where legality of an action greatly depends on consensus and established practices, which can change overnight. For example court ruling based on implicitness of access to privileged information would effectively eliminate high ranking officers from trading altogether.

baddox 9y ago

Insiders are still allowed to trade, they’re just not allowed to trade on the insider knowledge.

deleted 9y ago
[deleted]

T2_t2 9y ago

If he sells shares the day they vest, year after year, the only question then is about volume. Did he sell a larger volume than usual? That's a VERY different question to a binary "is it insider trading?"

URSpider94 9y ago
Nope, that’s not necessarily true. The test is whether he, or any other actor, gave the order to sell while in possession of material information. It’s possible to put an advance order in place to sell shares on a plan, which clears the issue because that decision is made in advance.
- pathseeker 9y ago
  >It’s possible to put an advance order in place to sell shares on a plan, which clears the issue because that decision is made in advance. That's what he did, no?
  - sudhirj 9y ago
    Only time, not number. The schedule allows for a sale on pre determined days, and on the day in question, after he had the news, he sold every share he legally could - way more than he usually did on the scheduled days.
  - josefx 9y ago
    He broke his pattern last year by changing the orders in october. At a time intel was already aware of Meltdown and with a puplication date for the vulnerability set in January. Wikipedia states that the issue had been shared with manufacturers in July, a month after he normally issues his orders mentioned by the article. Edit: The date on the last part is wrong, which doesn't change the fact that he changed his orders in the time between internal and public disclosure of Meltdown. I misread the article, in 2017 he issued his orders in February not June (2015).
- T2_t2 9y ago
  I posted this, but I have no idea how to interpret it: https://news.ycombinator.com/item?id=16104426 https://news.ycombinator.com/item?id=16104426 - the numbers make no sense to me.

tc313 9y ago

It has to be material inside informtion in order to be considered insider trading. He can argue that the small dip in the stock price after the news was released is evidence that the information was not material.