6 ms·

Early Lyft investors have a 180 day lockup period - same as employees.

by askafriend 8y ago

nissimk 8y ago
Is there any rule or provision preventing them from short selling the stock in another account?
- nemo44x 8y ago
  Yes that would be a violation of their lockup agreement. They can’t buy/sell puts/calls either.
  - docker_up 8y ago
    How would they be found out though?
    - mandeepj 8y ago
      It's all linked via your SSA
    - dboreham 8y ago
      Through KYC processes? They could theoretically conspire with another person who runs the trade but eventually compensates the principal. They'd only be found out through regular white collar crime fighting measures: parallel construction from NSA sigint for example.
      - docker_up 8y ago
        But how would Lyft know that an employee bought puts from E-trade? How is that information shared? I don't think there's any information being exchanged by every single brokerage to Lyft, is there? The lockup agreement is a contractual thing, it's not a legal document. I don't see how Lyft would have the legal rights to search.
        jedberg 8y ago
        How do the police know that you're cooking meth in your basement? They don't, but if you do something dumb or make a lot of money, they tend to find out. It's the same here. Buying/selling options on Lyft as an employee is against their employment contract, and probably SEC rules. If they make a few thousand dollars doing it, chances are no one will find out. If they make a few million, the SEC will probably look into that.
        docker_up 8y ago
        Why is the SEC involved, especially if there's no insider trading involved? What if a Lyft employee quit a few months ago, and then hedges her RSUs with puts? There's no insider trading involved, why would the SEC care?
        asynchrony 8y ago
        Employees are normally forbidden from trading any derivatives, short selling, or even buying shares in a margin account. I’m not sure about the case of an employee that has left the company, but I expect that it would still qualify as insider trading through some window.
        jedberg 8y ago
        The SEC deals with all trading irregularities and violations, not just insider trading. The rules aren’t there just because Lyft wants to be mean, they’re there because regulations require it and also because one of the guiding principles is “no perception of insider trading”. That means you have to avoid behaviors that might look like insider trading. A current or recent insider using hedging is very suspicious looking. What do they know? When I left Netflix I was warned that I needed to wait at least three months before making any trade other than buy. And I was still restricted to the employee trading window for six months.
        deleted 8y ago
        [deleted]
        dboreham 8y ago
- rongenre 8y ago
  Underwriters insist on a lockup period for a reason. Everyone asks about short selling and options, and the answer is always no.

Early Lyft investors have a 180 day lockup period - same as employees.

nissimk 8y ago

Is there any rule or provision preventing them from short selling the stock in another account?

nemo44x 8y ago
Yes that would be a violation of their lockup agreement. They can’t buy/sell puts/calls either.
- docker_up 8y ago
  How would they be found out though?
  - mandeepj 8y ago
    It's all linked via your SSA
  - dboreham 8y ago
    Through KYC processes? They could theoretically conspire with another person who runs the trade but eventually compensates the principal. They'd only be found out through regular white collar crime fighting measures: parallel construction from NSA sigint for example.
    - docker_up 8y ago
      But how would Lyft know that an employee bought puts from E-trade? How is that information shared? I don't think there's any information being exchanged by every single brokerage to Lyft, is there? The lockup agreement is a contractual thing, it's not a legal document. I don't see how Lyft would have the legal rights to search.
      - jedberg 8y ago
        How do the police know that you're cooking meth in your basement? They don't, but if you do something dumb or make a lot of money, they tend to find out. It's the same here. Buying/selling options on Lyft as an employee is against their employment contract, and probably SEC rules. If they make a few thousand dollars doing it, chances are no one will find out. If they make a few million, the SEC will probably look into that.
        docker_up 8y ago
        Why is the SEC involved, especially if there's no insider trading involved? What if a Lyft employee quit a few months ago, and then hedges her RSUs with puts? There's no insider trading involved, why would the SEC care?
        asynchrony 8y ago
        Employees are normally forbidden from trading any derivatives, short selling, or even buying shares in a margin account. I’m not sure about the case of an employee that has left the company, but I expect that it would still qualify as insider trading through some window.
        jedberg 8y ago
        The SEC deals with all trading irregularities and violations, not just insider trading. The rules aren’t there just because Lyft wants to be mean, they’re there because regulations require it and also because one of the guiding principles is “no perception of insider trading”. That means you have to avoid behaviors that might look like insider trading. A current or recent insider using hedging is very suspicious looking. What do they know? When I left Netflix I was warned that I needed to wait at least three months before making any trade other than buy. And I was still restricted to the employee trading window for six months.
        deleted 8y ago
        [deleted]
      - dboreham 8y ago
rongenre 8y ago
Underwriters insist on a lockup period for a reason. Everyone asks about short selling and options, and the answer is always no.