4 ms·

I posted this because my first web client was a journalist for the WSJ who went to jail in the 80's for insider trading, doing a similar scheme of buying stock

I posted this because my first web client was a journalist for the WSJ who went to jail in the 80's for insider trading, doing a similar scheme of buying stock in a company before he wrote a financial column about it. Paper comes out, stock soars and then makes a boatload. I don't know much about the market, but isn't this essentially the same scheme? And if that was considered insider trading, wouldn't pump & dump on Twitter be just as bad? This is what I'm referring to: http://www.bizjournalismhistory.org/1980_1984.htm http://www.bizjournalismhistory.org/1980_1984.htm

sosuke 16y ago
So I can't make a post about how awesome the company I have stock in is and profit from it? I thought I just had to disclose that I was a owner of that stock to avoid problems.
- rwhitman 16y ago
  Ah, so the problem is that he should have disclosed that he owned the stock?
  - jarin 16y ago
    Yeah, as far as I understand it you can talk up a company or stock as much as you want as long as you disclose that you have a financial stake in it.
    - zackattack 16y ago
      I was following the tweets in real-time. He did mention that he owned stock in the company. He first explained that he invested in TVG (TV Goods, a subsidiary that markets through channels like QVC and HSN), and then a few tweets later explained that the ticker symbol was HNHI.
- igravious 16y ago
  It took a day or two for reality to set in, and 50 Cent (whose real name is Curtis Jackson) began backing off of his cheerleading Monday, The New York Observer reports. He began sending more cautious messages to his followers, saying things like "I own HNHI stock thoughts on it are my opinion. Talk to a financial advisor about it." seems like hyping preceeded disclosure
- fleitz 16y ago
  Generally, no, there are very specific conditions which make such a statement legal. Statements such as "you will double your money" should always be avoided. Ideally you want a closed-loop system in which people viewing your statement have read to and agreed to the fact that you will be making money from your claims and your statement is marketing material and should not be construed as investment advice. Without such statements and provisions people reading the tweets could easily mistake such statements as investment advice or guarantees in regard to returns. Also, include a safe harbor provision regarding forward looking statements. Basically, if you're going to talk about stocks or other investments in which you have a stake, consult a lawyer, specifically one who knows the securities law in both the jurisdiction you're speaking, the jurisdictions in which the company is registered and the jurisdiction in which the exchange operates, and for good measure the jurisdictions in which the message will be received. This is the reason you sign 50 pages of legalese just to open up a trading account. It details exactly how, where, why and when your bank will fuck you over. This is why GS doesn't tweet about their Facebook deal and why 50 will be in jail long before Blankfein. 50 should be smarter than this. 50 cent doing this is the perfect opportunity for a beleaguered SEC to 'crackdown' on securities fraud on a very public figure in a very open and shut manner. This statement should not be construed as legal advice and you should retain counsel in order to obtain such advice :)
- rdtsc 16y ago
  There was similar case where someone would verify the academic credentials of CEOs of publicly traded companies in order to discover fraud and misrepresentation. After discovering a flaw, he would short the company's stock, then go public with the news. I maybe mistaken, but I believe that was not considered insider trading and his methods were a valid way to invest and make money. I think that is quite a brilliant strategy.
  - brown9-2 16y ago
    It can't be insider trading if you don't have any information from "inside" the company.
    - rdtsc 16y ago
      You are right. I used the term incorrectly, I meant it as a blanket term for all investment fraud.
  - djb_hackernews 16y ago
    mark cuban ran/runs sharesleuth.com. Lots of interesting research into very uninteresting "companies".
hristov 16y ago
Not exactly the same. The journalist may have done research and interviews for his column and thus may have gained insider information. If the journalists publishes the insider information, then it is no longer insider information, and everyone may trade on it. However, if the journalist trades on the insider information before he publishes it, it is still insider information when he trades on it, and that is illegal. It is not clear whether 50 cent had any insider info. And it did not seem that his tweet published any insider info. However, there are other ways he may get in trouble. EDIT: this is obviously not legal advice.
- rwhitman 16y ago
  I see. Yes, he did trade on more advanced information. And reading up on his case again, it was far more complex than a tweet from 50 Cent...
- eneveu 16y ago
  Would it be ok if the journalist buys the stock 10 seconds after the publication / blog post goes live? If not, how long should he wait? What about somebody who has insider information, publishes it on his personal blog (which is read by very few people), wait a day, then buys some stock? It's an interesting topic, I'm going to research it a little more, and look into our european laws :)

sosuke 16y ago

So I can't make a post about how awesome the company I have stock in is and profit from it? I thought I just had to disclose that I was a owner of that stock to avoid problems.

rwhitman 16y ago
Ah, so the problem is that he should have disclosed that he owned the stock?
- jarin 16y ago
  Yeah, as far as I understand it you can talk up a company or stock as much as you want as long as you disclose that you have a financial stake in it.
  - zackattack 16y ago
    I was following the tweets in real-time. He did mention that he owned stock in the company. He first explained that he invested in TVG (TV Goods, a subsidiary that markets through channels like QVC and HSN), and then a few tweets later explained that the ticker symbol was HNHI.
igravious 16y ago
It took a day or two for reality to set in, and 50 Cent (whose real name is Curtis Jackson) began backing off of his cheerleading Monday, The New York Observer reports. He began sending more cautious messages to his followers, saying things like "I own HNHI stock thoughts on it are my opinion. Talk to a financial advisor about it." seems like hyping preceeded disclosure
fleitz 16y ago
Generally, no, there are very specific conditions which make such a statement legal. Statements such as "you will double your money" should always be avoided. Ideally you want a closed-loop system in which people viewing your statement have read to and agreed to the fact that you will be making money from your claims and your statement is marketing material and should not be construed as investment advice. Without such statements and provisions people reading the tweets could easily mistake such statements as investment advice or guarantees in regard to returns. Also, include a safe harbor provision regarding forward looking statements. Basically, if you're going to talk about stocks or other investments in which you have a stake, consult a lawyer, specifically one who knows the securities law in both the jurisdiction you're speaking, the jurisdictions in which the company is registered and the jurisdiction in which the exchange operates, and for good measure the jurisdictions in which the message will be received. This is the reason you sign 50 pages of legalese just to open up a trading account. It details exactly how, where, why and when your bank will fuck you over. This is why GS doesn't tweet about their Facebook deal and why 50 will be in jail long before Blankfein. 50 should be smarter than this. 50 cent doing this is the perfect opportunity for a beleaguered SEC to 'crackdown' on securities fraud on a very public figure in a very open and shut manner. This statement should not be construed as legal advice and you should retain counsel in order to obtain such advice :)
rdtsc 16y ago
There was similar case where someone would verify the academic credentials of CEOs of publicly traded companies in order to discover fraud and misrepresentation. After discovering a flaw, he would short the company's stock, then go public with the news. I maybe mistaken, but I believe that was not considered insider trading and his methods were a valid way to invest and make money. I think that is quite a brilliant strategy.
- brown9-2 16y ago
  It can't be insider trading if you don't have any information from "inside" the company.
  - rdtsc 16y ago
    You are right. I used the term incorrectly, I meant it as a blanket term for all investment fraud.
- djb_hackernews 16y ago
  mark cuban ran/runs sharesleuth.com. Lots of interesting research into very uninteresting "companies".

hristov 16y ago

Not exactly the same. The journalist may have done research and interviews for his column and thus may have gained insider information. If the journalists publishes the insider information, then it is no longer insider information, and everyone may trade on it. However, if the journalist trades on the insider information before he publishes it, it is still insider information when he trades on it, and that is illegal. It is not clear whether 50 cent had any insider info. And it did not seem that his tweet published any insider info. However, there are other ways he may get in trouble. EDIT: this is obviously not legal advice.

rwhitman 16y ago
I see. Yes, he did trade on more advanced information. And reading up on his case again, it was far more complex than a tweet from 50 Cent...
eneveu 16y ago
Would it be ok if the journalist buys the stock 10 seconds after the publication / blog post goes live? If not, how long should he wait? What about somebody who has insider information, publishes it on his personal blog (which is read by very few people), wait a day, then buys some stock? It's an interesting topic, I'm going to research it a little more, and look into our european laws :)