3 ms·

Insider trading is not a crime, per se

teej 9y ago
He was charged with illegal insider trading. It turns out that is in fact a crime. > Defendant Jun Ying (“Ying”) committed securities fraud by engaging in illegal insider trading. After being entrusted with material, nonpublic information about a massive cyber-intrusion and data breach suffered by his employer, Equifax Inc. (“Equifax” or “the company”), Ying exercised all his vested Equifax stock options and sold the shares prior to the public announcement of the breach. By selling when he did, Ying avoided losses in excess of $117,000.
- zwily 9y ago
  I just listened to a podcast today about insider trading... and apparently, there’s not actually a law against insider trading itself. Technically what you get prosecuted for is stealing information, or something like that. Obviously there is tons of case law to support the illegality of insider trading, but you can’t find an actual law that says “you will go to jail if you do insider trading”.
  - chc 9y ago
    I'm pretty sure SEC Rule 10b-5[1] covers insider trading, along with various supplementary rules. [1]: https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=3d58bfb5f19c9ad7e1c1c20032a314df&mc=true&r=SECTION&n=se17.4.240_110b_65 https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=3d58bfb5f1...
    - tanderson92 9y ago
      Technically, a Rule is not a Law.
  - sokoloff 9y ago
    There are anti-fraud provisions in securities law; insider trading is prosecuted as a form of fraud.
    - fludlight 9y ago
      This methodology is not uncommon. Mail fraud and bribery of foreign officials are prosecuted as "depriving the public of honest services".
unreal37 9y ago
Apparently, though, he was not specifically told that Equifax had a data breach. He guessed they did based on a project he was being asked to drop everything and help out with. It'll be an interesting case if he pleads not guilty.
- oh_sigh 9y ago
  Yeah, I hope he fights the charges just so I can selfishly see how it plays out. It seems there is a strong paper trail of execs intentionally keeping ying out of the loop. If that's the case, and he figures out that everyone is just acting weird, it doesn't seem so straight forward that he was trading with material information. If I work at Amazon as a lowly sde and see Jeff bezos fuming in a conference room with the chief privacy and security officers, and I assume Amazon had a data breach and sell my stock, did I insider trade?
  - unclebucknasty 9y ago
    It's an interesting question, as even with the insight that everyone is "acting weird", he would have still been trading with more info than the average investor. OTOH, many execs would be privy to more info than the average investor as a matter of course, and we certainly don't prohibit them from trading. So, where is the line drawn?
  - billylindeman 9y ago
    i'd be very interested in knowing that as well. doesn't seem like it'd be material information
- chris_wot 9y ago
  If he guessed based on being told to drop everything... then he still knew there was something seriously wrong before everyone else. That's insider trading.
  - mulmen 9y ago
    But is it illegal insider trading? This is an honest question.

teej 9y ago

He was charged with illegal insider trading. It turns out that is in fact a crime. > Defendant Jun Ying (“Ying”) committed securities fraud by engaging in illegal insider trading. After being entrusted with material, nonpublic information about a massive cyber-intrusion and data breach suffered by his employer, Equifax Inc. (“Equifax” or “the company”), Ying exercised all his vested Equifax stock options and sold the shares prior to the public announcement of the breach. By selling when he did, Ying avoided losses in excess of $117,000.

zwily 9y ago
I just listened to a podcast today about insider trading... and apparently, there’s not actually a law against insider trading itself. Technically what you get prosecuted for is stealing information, or something like that. Obviously there is tons of case law to support the illegality of insider trading, but you can’t find an actual law that says “you will go to jail if you do insider trading”.
- chc 9y ago
  I'm pretty sure SEC Rule 10b-5[1] covers insider trading, along with various supplementary rules. [1]: https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=3d58bfb5f19c9ad7e1c1c20032a314df&mc=true&r=SECTION&n=se17.4.240_110b_65 https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=3d58bfb5f1...
  - tanderson92 9y ago
    Technically, a Rule is not a Law.
- sokoloff 9y ago
  There are anti-fraud provisions in securities law; insider trading is prosecuted as a form of fraud.
  - fludlight 9y ago
    This methodology is not uncommon. Mail fraud and bribery of foreign officials are prosecuted as "depriving the public of honest services".

unreal37 9y ago

Apparently, though, he was not specifically told that Equifax had a data breach. He guessed they did based on a project he was being asked to drop everything and help out with. It'll be an interesting case if he pleads not guilty.

oh_sigh 9y ago
Yeah, I hope he fights the charges just so I can selfishly see how it plays out. It seems there is a strong paper trail of execs intentionally keeping ying out of the loop. If that's the case, and he figures out that everyone is just acting weird, it doesn't seem so straight forward that he was trading with material information. If I work at Amazon as a lowly sde and see Jeff bezos fuming in a conference room with the chief privacy and security officers, and I assume Amazon had a data breach and sell my stock, did I insider trade?
- unclebucknasty 9y ago
  It's an interesting question, as even with the insight that everyone is "acting weird", he would have still been trading with more info than the average investor. OTOH, many execs would be privy to more info than the average investor as a matter of course, and we certainly don't prohibit them from trading. So, where is the line drawn?
- billylindeman 9y ago
  i'd be very interested in knowing that as well. doesn't seem like it'd be material information
chris_wot 9y ago
If he guessed based on being told to drop everything... then he still knew there was something seriously wrong before everyone else. That's insider trading.
- mulmen 9y ago
  But is it illegal insider trading? This is an honest question.