4 ms·

Breaking it down: 1). Set up a 10b5-1 plan selling all your shares each day. 2). Set up a 10b5-1 plan that buys as many shares as possible. 3). Get insider i

Breaking it down: 1). Set up a 10b5-1 plan selling all your shares each day. 2). Set up a 10b5-1 plan that buys as many shares as possible. 3). Get insider information on the company. a). If good for company cancel plan from step 1. b). If bad for company cancel plan from step 2. c). If neither cancel both plans. 4). Profit.

dllthomas 9y ago
Yeah, I got that part. The problem is that after 3a) or 3b), you have made trades. So "no trades were made, it can't possibly be insider trading" doesn't apply. It may be that the SEC would nonetheless honor the "it's not an issue if you're just following your plan" thing, but since obviously you're not just following your plan I wouldn't bet on it. I'd be interested to know of examples in either direction if anyone has been bold enough to try this.
- deleted 9y ago
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- zeth___ 9y ago
  You're not choosing to make a trade, you're choosing to cancel a trade. Both are things the FCC has said it will not charge anyone other as long as congress does not change the rules. Sorry to say but you're looking for a way to defend an indefensible system. If you want to see it in action look at what the Intel CEO did.
  - dllthomas 9y ago
    > You're not choosing to make a trade, you're choosing to cancel a trade. You're also choosing not to cancel a trade, which is the difference from the example you've cited. Choosing not to cancel a trade based on material, non-public information after establishing a pattern of regularly canceling your planned trades doesn't seem to be something that's been tested (at least in anything discussed here so far). And note that I'm not saying no one pushes - or crosses - lines; nor am I saying that the system isn't exploitable near the margins. I am saying that if you were as flagrant in abusing it as you posted above, I wouldn't bet on your safety from the SEC. > Sorry to say but you're looking for a way to defend an indefensible system. No, I'm contesting a claim that seems inaccurate. I quite readily agree there are things that need fixing. > If you want to see it in action look at what the Intel CEO did. I don't think we have enough details about what the Intel CEO did to say much - more shares were sold, but it was plausible the formula was set in advance of discovery of the flaw and more shares were sold simply because the stock had gone up. If you have a source with more details, please share it.
    - zeth___ 9y ago
      Perhaps you should call the FTC and let them know their interpretation of the law is wrong.
      - dllthomas 9y ago
        Well, that's a garbage response. It's a useless and snarky dismissal if I had been saying their interpretation was wrong... But my entire point has been that we haven't observed their interpretation of the law as applied to the extreme circumstance you described. At this point, I'm sufficiently skeptical that you're engaging in good faith that I probably won't be responding further.

dllthomas 9y ago

Yeah, I got that part. The problem is that after 3a) or 3b), you have made trades. So "no trades were made, it can't possibly be insider trading" doesn't apply. It may be that the SEC would nonetheless honor the "it's not an issue if you're just following your plan" thing, but since obviously you're not just following your plan I wouldn't bet on it. I'd be interested to know of examples in either direction if anyone has been bold enough to try this.

deleted 9y ago
[deleted]
zeth___ 9y ago
You're not choosing to make a trade, you're choosing to cancel a trade. Both are things the FCC has said it will not charge anyone other as long as congress does not change the rules. Sorry to say but you're looking for a way to defend an indefensible system. If you want to see it in action look at what the Intel CEO did.
- dllthomas 9y ago
  > You're not choosing to make a trade, you're choosing to cancel a trade. You're also choosing not to cancel a trade, which is the difference from the example you've cited. Choosing not to cancel a trade based on material, non-public information after establishing a pattern of regularly canceling your planned trades doesn't seem to be something that's been tested (at least in anything discussed here so far). And note that I'm not saying no one pushes - or crosses - lines; nor am I saying that the system isn't exploitable near the margins. I am saying that if you were as flagrant in abusing it as you posted above, I wouldn't bet on your safety from the SEC. > Sorry to say but you're looking for a way to defend an indefensible system. No, I'm contesting a claim that seems inaccurate. I quite readily agree there are things that need fixing. > If you want to see it in action look at what the Intel CEO did. I don't think we have enough details about what the Intel CEO did to say much - more shares were sold, but it was plausible the formula was set in advance of discovery of the flaw and more shares were sold simply because the stock had gone up. If you have a source with more details, please share it.
  - zeth___ 9y ago
    Perhaps you should call the FTC and let them know their interpretation of the law is wrong.
    - dllthomas 9y ago
      Well, that's a garbage response. It's a useless and snarky dismissal if I had been saying their interpretation was wrong... But my entire point has been that we haven't observed their interpretation of the law as applied to the extreme circumstance you described. At this point, I'm sufficiently skeptical that you're engaging in good faith that I probably won't be responding further.