6 ms·

Checkout Carbon Black’s stock today before the announcement. It was way up, well before the news became public ....

whatshisface 7y ago
If I was going to execute an acquisition, I would buy a bunch of shares, or maybe some kind of derivative, well before I let anybody know what I was doing. Would that be legal? Edit: by "I" I mean the company, not the CEO.
- conroy 7y ago
  I’m not a lawyer, but isn’t that the definition of insider trading?
  - wpietri 7y ago
    It is very much insider trading: https://en.wikipedia.org/wiki/Insider_trading https://en.wikipedia.org/wiki/Insider_trading
- ternaryoperator 7y ago
  If any part of that purchase is the result of information that is not yet public, you've committed insider trading (at least in the US).
  - jxi 7y ago
    Isn't it only inside trading if it's a breach of contract? If you're part of either the company being acquired or doing the acquiring then it's breach of contract and therefore insider trading. If I find a random piece of paper on the floor about the future acquisition and trade based on that info, I don't think it's considered insider trading. The person who dropped that paper would likely get into some trouble though. It's not really a matter of if the info is public or not, otherwise every hedge fund would be out of business.
  - techslave 7y ago
    unless you’re a member of congress
    - jjeaff 7y ago
      To clarify, I believe it would still be illegal as a member of Congress, unless the information you are trading on is gleaned from congressional meetings or based on legislation that will be enacted.
- riffraff 7y ago
  AFAIR, you need to disclose that once you reach a certain threshold.
- reader2 7y ago
  If you are trading only based on your intentions then it would not be considered insider trading in the US. Bill Ackman did something similar with Allergan. However, you need to disclose as soon as you breach certain ownership limits. - no legal advice of course -
jliptzin 7y ago
Are you surprised that insider trading is occurring or just that it is blatantly obvious in this specific instance? This kind of thing happens regularly by all sorts of players. That's part of the reason retail investors should just buy an index fund, they can't expect to win against professionals engaging in insider trading all the time. SEC enforcement of insider trading was 51 in all of 2018. 51, out of probably millions of instances. https://www.cov.com/en/news-and-insights/insights/2018/11/sec-enforcement-activity-in-2018 https://www.cov.com/en/news-and-insights/insights/2018/11/se...
- dehrmann 7y ago
  Quick anecdote: I was in a bar in NYC and overheard an i-banker running his mouth about an M&A deal he was working on. The deal closed a month or two later.
  - pmikesell 7y ago
    Good point - this was information leakage that, even if you had traded on it - would not be insider trading.
    - dehrmann 7y ago
      To be clear, these were private companies, so I obviously didn't trade on that information, but I somehow doubt that this guy was really thinking about that when he was trying to impress his date.
    - dogma1138 7y ago
      Depends on the country, in the US no in the UK it would be.
    - lucb1e 7y ago
      So basically you're not allowed to trade with foreknowledge, it has to be a lottery? Stocks always seemed like legal gambling to me. If you can't predict it and you can't use any edge that others don't know about, then doing anything but using index funds is gambling, or am I missing something?
Turbots 7y ago
Trading was halted on the stock as well, don't know how normal that is in these kind of situations
slavoingilizov 7y ago
And when exactly did the news become public? In my experience it usually takes minutes/hours between the event and the mass media covering it. I can bet it isn't insider trading but algorithms reacting to news faster a human can.

If I was going to execute an acquisition, I would buy a bunch of shares, or maybe some kind of derivative, well before I let anybody know what I was doing. Would that be legal? Edit: by "I" I mean the company, not the CEO.

conroy 7y ago
I’m not a lawyer, but isn’t that the definition of insider trading?
- wpietri 7y ago
  It is very much insider trading: https://en.wikipedia.org/wiki/Insider_trading https://en.wikipedia.org/wiki/Insider_trading
ternaryoperator 7y ago
If any part of that purchase is the result of information that is not yet public, you've committed insider trading (at least in the US).
- jxi 7y ago
  Isn't it only inside trading if it's a breach of contract? If you're part of either the company being acquired or doing the acquiring then it's breach of contract and therefore insider trading. If I find a random piece of paper on the floor about the future acquisition and trade based on that info, I don't think it's considered insider trading. The person who dropped that paper would likely get into some trouble though. It's not really a matter of if the info is public or not, otherwise every hedge fund would be out of business.
- techslave 7y ago
  unless you’re a member of congress
  - jjeaff 7y ago
    To clarify, I believe it would still be illegal as a member of Congress, unless the information you are trading on is gleaned from congressional meetings or based on legislation that will be enacted.
riffraff 7y ago
AFAIR, you need to disclose that once you reach a certain threshold.
reader2 7y ago
If you are trading only based on your intentions then it would not be considered insider trading in the US. Bill Ackman did something similar with Allergan. However, you need to disclose as soon as you breach certain ownership limits. - no legal advice of course -

jliptzin 7y ago

Are you surprised that insider trading is occurring or just that it is blatantly obvious in this specific instance? This kind of thing happens regularly by all sorts of players. That's part of the reason retail investors should just buy an index fund, they can't expect to win against professionals engaging in insider trading all the time. SEC enforcement of insider trading was 51 in all of 2018. 51, out of probably millions of instances. https://www.cov.com/en/news-and-insights/insights/2018/11/sec-enforcement-activity-in-2018 https://www.cov.com/en/news-and-insights/insights/2018/11/se...

dehrmann 7y ago
Quick anecdote: I was in a bar in NYC and overheard an i-banker running his mouth about an M&A deal he was working on. The deal closed a month or two later.
- pmikesell 7y ago
  Good point - this was information leakage that, even if you had traded on it - would not be insider trading.
  - dehrmann 7y ago
    To be clear, these were private companies, so I obviously didn't trade on that information, but I somehow doubt that this guy was really thinking about that when he was trying to impress his date.
  - dogma1138 7y ago
    Depends on the country, in the US no in the UK it would be.
  - lucb1e 7y ago
    So basically you're not allowed to trade with foreknowledge, it has to be a lottery? Stocks always seemed like legal gambling to me. If you can't predict it and you can't use any edge that others don't know about, then doing anything but using index funds is gambling, or am I missing something?

Turbots 7y ago

Trading was halted on the stock as well, don't know how normal that is in these kind of situations

slavoingilizov 7y ago

And when exactly did the news become public? In my experience it usually takes minutes/hours between the event and the mass media covering it. I can bet it isn't insider trading but algorithms reacting to news faster a human can.