7 ms·

One thing that I can't get here - this guy knew it's insider trading. Being CIO, he must have known there's a law against it. Did he expect to get away with it

by smsm42 9y ago

One thing that I can't get here - this guy knew it's insider trading. Being CIO, he must have known there's a law against it. Did he expect to get away with it just because he's a CIO, like other Equifax high-levels did and like politicians and Congressmen routinely do? Did he somehow miscalculate, or is he kind of lightning rod so that nobody could say that there were no prosecutions, and in the meantime he'll be compensated for whatever fate he suffers?

dboreham 9y ago
Are we sure he wasn't just clueless? I get that a Silicon Valley CIO would know about SEC rules but perhaps a legacy industry CIO wouldn't? I mean, he didn't know that you have to keep track of vulnerabilities in the JARs you package into Internet-facing web services...
- smsm42 9y ago
  I know it's illegal. The first thing I thought when I heard about Equifax exec selling their stock is "they are playing with fire, this sure looks like illegal insider trading". And I am nobody, and haven't lived in US for that long. CIO of a major corporation surely knows these things better than me. So either he knows a loophole I don't know (completely possible), or he had some hopes that what is illegal for me won't be for him. I am curious as to why he thought that. > I mean, he didn't know that you have to keep track of vulnerabilities in the JARs you package into Internet-facing web services I won't actually blame him for that. I mean, it was his screwup, as a CIO, but one that could happen to everybody, given some bad luck and some routine mistakes everybody could make from time to time. So here I am not surprised how it happened, I may not know the details but I am pretty sure I understand the general gist of how they got there. The trading part is different - here it's an apparent blatant and willful illegal conduct that is in the open and will be caught. Why a smart and successful man does it? I am curious.
- grajaganDev 9y ago
  He was at a startup in the nineties, getting equity. He knows the SEC rules on insider trading.
- wu-ikkyu 9y ago
  Does it matter if he knew it was illegal or not?
  - sokoloff 9y ago
    Generally not, though there is case law in tax cases for exceptions based on a lack of willfulness in a complex and potentially good faith belief that the defendant was acting in accordance with the law. https://en.wikipedia.org/wiki/Ignorantia_juris_non_excusat https://en.wikipedia.org/wiki/Ignorantia_juris_non_excusat
  - smsm42 9y ago
    Legally, no. But to understand his behavior - yes, it is interesting why a smart person would do knowingly illegal thing for such a measly (compared to the risk if he'd be caught) gain.
- s73v3r_ 9y ago
  I'm pretty sure that's one of those things they tell you in the Executive Onboarding. As well with how to get around it.
choxi 9y ago
I was wondering the same thing. Some of these cases seem so brazen, like Carl Icahn dumping $30M of his steel-related stocks before Trump announced tariffs on steel. To me it seems so obvious that he had insider information, but he's not an idiot and he wouldn't do it unless he was pretty confident he could get away with it. Am I missing some nuance of insider trading law, or is it just that easy to get away with it? - http://knowledge.wharton.upenn.edu/article/why-insider-trading-is-hard-to-define-prove-and-prevent/ http://knowledge.wharton.upenn.edu/article/why-insider-tradi... - http://www.chicagobusiness.com/article/20141210/NEWS04/141219974/insider-trading-cases-just-got-harder-to-prove http://www.chicagobusiness.com/article/20141210/NEWS04/14121... - https://thinkprogress.org/carl-icahn-insider-trading-2bbd9561f9e6/ https://thinkprogress.org/carl-icahn-insider-trading-2bbd956...
- nfriedly 9y ago
  > Am I missing some nuance of insider trading law, or is it just that easy to get away with it? I get the feeling that illegal insider trading is kind of like speeding: it happens all the time and people get caught and fine for it occasionally.
  - smsm42 9y ago
    I'd rather compare it to doing hard drugs. Everybody knows a lot of high-profile people do it and rarely get prosecuted, though theoretically it's a felony.
- sseveran 9y ago
  Well for one you would have to show that Carl knew that the tariffs were coming. Otherwise he started selling the stock within a couple of days of earnings when the stock had already experienced a pretty large price drop. Unless there was proof that he knew and used that to trade it would be a pretty hard case to bring. Mark Cuban was found not guilty of something similar. https://www.thestreet.com/quote/MTW.html https://www.thestreet.com/quote/MTW.html https://www.reuters.com/article/us-usa-sec-cuban-verdict/billionaire-mark-cuban-cleared-of-insider-trading-blasts-u-s-government-idUSBRE99F0ZM20131016 https://www.reuters.com/article/us-usa-sec-cuban-verdict/bil...
philipodonnell 9y ago
> this guy knew it's insider trading See, I don't know that he did at the time. I think he guessed, sold his stock before he knew whether his guess was right or not, and ended up being right. The question will be whether his guess was based on "material non-public information", but that is a much more difficult thing to determine for someone in the moment.

by smsm42 9y ago

dboreham 9y ago

Are we sure he wasn't just clueless? I get that a Silicon Valley CIO would know about SEC rules but perhaps a legacy industry CIO wouldn't? I mean, he didn't know that you have to keep track of vulnerabilities in the JARs you package into Internet-facing web services...

smsm42 9y ago
I know it's illegal. The first thing I thought when I heard about Equifax exec selling their stock is "they are playing with fire, this sure looks like illegal insider trading". And I am nobody, and haven't lived in US for that long. CIO of a major corporation surely knows these things better than me. So either he knows a loophole I don't know (completely possible), or he had some hopes that what is illegal for me won't be for him. I am curious as to why he thought that. > I mean, he didn't know that you have to keep track of vulnerabilities in the JARs you package into Internet-facing web services I won't actually blame him for that. I mean, it was his screwup, as a CIO, but one that could happen to everybody, given some bad luck and some routine mistakes everybody could make from time to time. So here I am not surprised how it happened, I may not know the details but I am pretty sure I understand the general gist of how they got there. The trading part is different - here it's an apparent blatant and willful illegal conduct that is in the open and will be caught. Why a smart and successful man does it? I am curious.
grajaganDev 9y ago
He was at a startup in the nineties, getting equity. He knows the SEC rules on insider trading.
wu-ikkyu 9y ago
Does it matter if he knew it was illegal or not?
- sokoloff 9y ago
  Generally not, though there is case law in tax cases for exceptions based on a lack of willfulness in a complex and potentially good faith belief that the defendant was acting in accordance with the law. https://en.wikipedia.org/wiki/Ignorantia_juris_non_excusat https://en.wikipedia.org/wiki/Ignorantia_juris_non_excusat
- smsm42 9y ago
  Legally, no. But to understand his behavior - yes, it is interesting why a smart person would do knowingly illegal thing for such a measly (compared to the risk if he'd be caught) gain.
s73v3r_ 9y ago
I'm pretty sure that's one of those things they tell you in the Executive Onboarding. As well with how to get around it.

choxi 9y ago

I was wondering the same thing. Some of these cases seem so brazen, like Carl Icahn dumping $30M of his steel-related stocks before Trump announced tariffs on steel. To me it seems so obvious that he had insider information, but he's not an idiot and he wouldn't do it unless he was pretty confident he could get away with it. Am I missing some nuance of insider trading law, or is it just that easy to get away with it? - http://knowledge.wharton.upenn.edu/article/why-insider-trading-is-hard-to-define-prove-and-prevent/ http://knowledge.wharton.upenn.edu/article/why-insider-tradi... - http://www.chicagobusiness.com/article/20141210/NEWS04/141219974/insider-trading-cases-just-got-harder-to-prove http://www.chicagobusiness.com/article/20141210/NEWS04/14121... - https://thinkprogress.org/carl-icahn-insider-trading-2bbd9561f9e6/ https://thinkprogress.org/carl-icahn-insider-trading-2bbd956...

nfriedly 9y ago
> Am I missing some nuance of insider trading law, or is it just that easy to get away with it? I get the feeling that illegal insider trading is kind of like speeding: it happens all the time and people get caught and fine for it occasionally.
- smsm42 9y ago
  I'd rather compare it to doing hard drugs. Everybody knows a lot of high-profile people do it and rarely get prosecuted, though theoretically it's a felony.
sseveran 9y ago
Well for one you would have to show that Carl knew that the tariffs were coming. Otherwise he started selling the stock within a couple of days of earnings when the stock had already experienced a pretty large price drop. Unless there was proof that he knew and used that to trade it would be a pretty hard case to bring. Mark Cuban was found not guilty of something similar. https://www.thestreet.com/quote/MTW.html https://www.thestreet.com/quote/MTW.html https://www.reuters.com/article/us-usa-sec-cuban-verdict/billionaire-mark-cuban-cleared-of-insider-trading-blasts-u-s-government-idUSBRE99F0ZM20131016 https://www.reuters.com/article/us-usa-sec-cuban-verdict/bil...

philipodonnell 9y ago

> this guy knew it's insider trading See, I don't know that he did at the time. I think he guessed, sold his stock before he knew whether his guess was right or not, and ended up being right. The question will be whether his guess was based on "material non-public information", but that is a much more difficult thing to determine for someone in the moment.