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Generally curious: Is there such a thing as "insider trading" for real estate purchases? For example, what if Bezos were to buy a ton of real estate in the DC

Generally curious: Is there such a thing as "insider trading" for real estate purchases? For example, what if Bezos were to buy a ton of real estate in the DC area anticipating the value would go up after he announces Amazon will locate there, and he could effectively position himself as a "slumlord" of sorts for the surrounding real estate market?

eqmvii 8y ago
No. Insider trading (in the U.S.) is a specific crime based on federal securities law.
karangoeluw 8y ago
Do I have some news for you. https://www.washingtonpost.com/news/reliable-source/wp/2017/01/12/jeff-bezos-is-the-anonymous-buyer-of-the-biggest-house-in-washington/?noredirect=on&utm_term=.b919f58e187d https://www.washingtonpost.com/news/reliable-source/wp/2017/...
- mjlee 8y ago
  I think it's more likely he simply chose to put HQ2 near his house rather than his house near where he planned to put HQ2.
  - gowld 8y ago
    Why? Likely he made both decisions together, since that's the obvious behavior.
cm2187 8y ago
Not a lawyer but I understand that insider dealing is defined and covered by securities laws and regulations. For instance I believe there is no such thing as insider dealing in the foreign exchange market.
- kolbe 8y ago
  >that insider dealing is defined and covered by securities laws and regulations Correct. Now, if these employees had purchased mortgage backed securities, then it would be a different story.
  - mr_toad 8y ago
    Don’t they also have to be an insider? If an officer of company A buys securities from company B based on inside knowledge of company A, does that even count as insider trading?
    - icebraining 8y ago
      Yes, since SEC v Materia (https://openjurist.org/745/f2d/197/securities-and-exchange-commission-v-materia https://openjurist.org/745/f2d/197/securities-and-exchange-c...).
imh 8y ago
>While employees of companies are barred from buying or selling stocks based on information that has not yet been made public, lawyers told the Journal that they were unaware of any such ban affecting real estate transactions. It's the third sentence in the seven sentence OP.
inputcoffee 8y ago
Insider trading is wrong based on the theory that the insider -- the owner of some shares -- has a fiduciary duty to the company. That's why there are no equivalents in commodities or real estate. However, if Bezos were to buy a "ton" of real estate in the immediate area and then intervene in the process solely to enrich himself, the share holders of Amazon may feel they have used their money to enrich himself. (I am not suggesting anything of the sort actually happened in this case.)
bravo22 8y ago
Matt Levine covered this very exact situation vis-a-vis Amazon https://www.bloomberg.com/opinion/articles/2018-10-22/front-running-amazon-with-buildings https://www.bloomberg.com/opinion/articles/2018-10-22/front-...
siberianbear 8y ago
Matt Levine [1] is a lawyer and he wrote [2] once that he doesn't think it's a violation of insider trading laws to transact in real estate with insider knowledge: The insider trading laws apply only to securities markets — even insider trading in commodities markets is mostly okay 2 — and that probably is because of some background expectation of a level playing field in those markets. Nobody expects real estate to be fair; it is not exchange-traded and liquid and fungible; it is just obviously a market where some people know things that others don’t. Insider trading in operation is about theft, not about fairness, but the reason that the law concerns itself with the theft of one particular kind of information — or, rather, with one particular misuse of other people’s information — probably is about fairness. [1] https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthew-s-levine https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthe... [2] https://www.bloomberg.com/opinion/articles/2018-10-22/front-running-amazon-with-buildings https://www.bloomberg.com/opinion/articles/2018-10-22/front-... Edit: I stand corrected, Matt Levine is a lawyer.
- zb 8y ago
  Matt Levine is actually a lawyer.
Digory 8y ago
Not "insider trading," no. I do wonder if the seller of the condo might have recourse (under the outer edges of deceptive trade practices laws), or if Amazon itself would have recourse (by some kind of corporate opportunity doctrine). And if Amazon does, can shareholders act for it, or force Amazon to act?

eqmvii 8y ago

No. Insider trading (in the U.S.) is a specific crime based on federal securities law.

karangoeluw 8y ago

Do I have some news for you. https://www.washingtonpost.com/news/reliable-source/wp/2017/01/12/jeff-bezos-is-the-anonymous-buyer-of-the-biggest-house-in-washington/?noredirect=on&utm_term=.b919f58e187d https://www.washingtonpost.com/news/reliable-source/wp/2017/...

mjlee 8y ago
I think it's more likely he simply chose to put HQ2 near his house rather than his house near where he planned to put HQ2.
- gowld 8y ago
  Why? Likely he made both decisions together, since that's the obvious behavior.

cm2187 8y ago

Not a lawyer but I understand that insider dealing is defined and covered by securities laws and regulations. For instance I believe there is no such thing as insider dealing in the foreign exchange market.

kolbe 8y ago
>that insider dealing is defined and covered by securities laws and regulations Correct. Now, if these employees had purchased mortgage backed securities, then it would be a different story.
- mr_toad 8y ago
  Don’t they also have to be an insider? If an officer of company A buys securities from company B based on inside knowledge of company A, does that even count as insider trading?
  - icebraining 8y ago
    Yes, since SEC v Materia (https://openjurist.org/745/f2d/197/securities-and-exchange-commission-v-materia https://openjurist.org/745/f2d/197/securities-and-exchange-c...).

imh 8y ago

>While employees of companies are barred from buying or selling stocks based on information that has not yet been made public, lawyers told the Journal that they were unaware of any such ban affecting real estate transactions. It's the third sentence in the seven sentence OP.

inputcoffee 8y ago

Insider trading is wrong based on the theory that the insider -- the owner of some shares -- has a fiduciary duty to the company. That's why there are no equivalents in commodities or real estate. However, if Bezos were to buy a "ton" of real estate in the immediate area and then intervene in the process solely to enrich himself, the share holders of Amazon may feel they have used their money to enrich himself. (I am not suggesting anything of the sort actually happened in this case.)

bravo22 8y ago

Matt Levine covered this very exact situation vis-a-vis Amazon https://www.bloomberg.com/opinion/articles/2018-10-22/front-running-amazon-with-buildings https://www.bloomberg.com/opinion/articles/2018-10-22/front-...

siberianbear 8y ago

Matt Levine [1] is a lawyer and he wrote [2] once that he doesn't think it's a violation of insider trading laws to transact in real estate with insider knowledge: The insider trading laws apply only to securities markets — even insider trading in commodities markets is mostly okay 2 — and that probably is because of some background expectation of a level playing field in those markets. Nobody expects real estate to be fair; it is not exchange-traded and liquid and fungible; it is just obviously a market where some people know things that others don’t. Insider trading in operation is about theft, not about fairness, but the reason that the law concerns itself with the theft of one particular kind of information — or, rather, with one particular misuse of other people’s information — probably is about fairness. [1] https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthew-s-levine https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthe... [2] https://www.bloomberg.com/opinion/articles/2018-10-22/front-running-amazon-with-buildings https://www.bloomberg.com/opinion/articles/2018-10-22/front-... Edit: I stand corrected, Matt Levine is a lawyer.

zb 8y ago
Matt Levine is actually a lawyer.

Digory 8y ago

Not "insider trading," no. I do wonder if the seller of the condo might have recourse (under the outer edges of deceptive trade practices laws), or if Amazon itself would have recourse (by some kind of corporate opportunity doctrine). And if Amazon does, can shareholders act for it, or force Amazon to act?