3 ms·

It's quite possible that these were scheduled trades that were arranged far in advance before either executive was aware of the breach. So, no, not necessarily

It's quite possible that these were scheduled trades that were arranged far in advance before either executive was aware of the breach. So, no, not necessarily insider trading. The optics sure look bad, but it could just be shitty timing.

peteradio 7y ago
Doesn't it say in the quote that these were not scheduled? !
steveklabnik 7y ago
From the parent: > These sales were not made pursuant to a Rule 10b5–1 trading plan.
- jagged-chisel 7y ago
  "pre-arranged" != "Rue 10b5-1 trading plan" I'm not an expert in stock trading, but this logic seems very plausible. A Plan does not preclude other arrangements to sell shares
  - steveklabnik 7y ago
    I am admittedly not the most educated person in this area (I wasn't 100% sure that "rule 10b5-1" was the rule that applied here), so I'd like to learn more. Can you give me an example of a reason you'd pre-arrange the sale of stock but not do it in accordance with Rule 10b5-1?
    - jagged-chisel 7y ago
      Arranging some other transaction (e.g. buying a yacht) in advance that would require cash, so the executive plans in advance a single sale to execute just ahead of the need for cash. If we go with the yacht purchase, perhaps in six months the builder needs final payment, so Mr. Executive arranges for a single sale of company stock a couple weeks before that date. Maybe such a thing does indeed require amending The Plan, but I haven't seen anyone with expertise chime in. I'm just saying that logically, "pre-arranged" does not necessitate "working within Rule 10b5-1"
      - steveklabnik 7y ago
        Yeah, I would assume that something like that would also be done within Rule 10b5-1, but that has hidden assumptions that I know nothing about, like that it's not just "the plan" but multiple plans, etc. Anyway, thanks.
      - semi-extrinsic 7y ago
        Not an expert either, but if such a thing was allowed, you could arrange to buy expensive stuff you want to have on a regular basis (I would assume this is not uncommon for CEOs) and then just agree orally with the seller to cancel the transactions when the stock is down, go through with it when the stock is up.
        jagged-chisel 7y ago
        I think cancelling at opportune moments would fall afoul of 'pre-arrangment' whether using a plan or not.
  - nolok 7y ago
    Maybe, but "pre-arranged legally" == "Rue 10b5-1 trading plan". So if it was pre-arranged but was not following the rules, it doesn't matter that it was pre-arranged, it's still counts as illegal insider trading as-if not pre-arranged. Reasons being super obvious, since it would be easy to do insider trading in a stealthy way otherwise.
  - scarejunba 7y ago
    The purpose of that trading plan is precisely to allow you to have arrangements to sell shares as an insider. So if he was pre-arranging legally, this is how he'd do it. You don't have to be an expert. Practically everyone who isn't rank-and-file gets the dossiers on this nonsense in a public company.
ojbyrne 7y ago
Given the above quote referencing https://www.investopedia.com/terms/r/rule-10b5-1.asp https://www.investopedia.com/terms/r/rule-10b5-1.asp that seems unlikely.
AiApotheosis 7y ago
Is there another way they could have executed trades legally, without following rule 10b5-1? https://www.investopedia.com/terms/r/rule-10b5-1.asp https://www.investopedia.com/terms/r/rule-10b5-1.asp
- hermitdev 7y ago
  I think so, they still have to be publicly disclosed with an appropriate notice. I don't know the exact rules, but I think it typically has to be announced something like 30 days prior. May also involve restrictions around significant events such as earnings calls, quarterly events or shareholder meetings. I'm not aware of the details, as I'm just a peon in Back Office, but I do know traders pay attention to not-insider "insider" trading announcements from the SEC (yes, this pretrade information is publicly available from the SEC). I have no idea about non-US rules.
deleted 7y ago
[deleted]

peteradio 7y ago

Doesn't it say in the quote that these were not scheduled? !

steveklabnik 7y ago

From the parent: > These sales were not made pursuant to a Rule 10b5–1 trading plan.

jagged-chisel 7y ago
"pre-arranged" != "Rue 10b5-1 trading plan" I'm not an expert in stock trading, but this logic seems very plausible. A Plan does not preclude other arrangements to sell shares
- steveklabnik 7y ago
  I am admittedly not the most educated person in this area (I wasn't 100% sure that "rule 10b5-1" was the rule that applied here), so I'd like to learn more. Can you give me an example of a reason you'd pre-arrange the sale of stock but not do it in accordance with Rule 10b5-1?
  - jagged-chisel 7y ago
    Arranging some other transaction (e.g. buying a yacht) in advance that would require cash, so the executive plans in advance a single sale to execute just ahead of the need for cash. If we go with the yacht purchase, perhaps in six months the builder needs final payment, so Mr. Executive arranges for a single sale of company stock a couple weeks before that date. Maybe such a thing does indeed require amending The Plan, but I haven't seen anyone with expertise chime in. I'm just saying that logically, "pre-arranged" does not necessitate "working within Rule 10b5-1"
    - steveklabnik 7y ago
      Yeah, I would assume that something like that would also be done within Rule 10b5-1, but that has hidden assumptions that I know nothing about, like that it's not just "the plan" but multiple plans, etc. Anyway, thanks.
    - semi-extrinsic 7y ago
      Not an expert either, but if such a thing was allowed, you could arrange to buy expensive stuff you want to have on a regular basis (I would assume this is not uncommon for CEOs) and then just agree orally with the seller to cancel the transactions when the stock is down, go through with it when the stock is up.
      - jagged-chisel 7y ago
        I think cancelling at opportune moments would fall afoul of 'pre-arrangment' whether using a plan or not.
- nolok 7y ago
  Maybe, but "pre-arranged legally" == "Rue 10b5-1 trading plan". So if it was pre-arranged but was not following the rules, it doesn't matter that it was pre-arranged, it's still counts as illegal insider trading as-if not pre-arranged. Reasons being super obvious, since it would be easy to do insider trading in a stealthy way otherwise.
- scarejunba 7y ago
  The purpose of that trading plan is precisely to allow you to have arrangements to sell shares as an insider. So if he was pre-arranging legally, this is how he'd do it. You don't have to be an expert. Practically everyone who isn't rank-and-file gets the dossiers on this nonsense in a public company.

ojbyrne 7y ago

Given the above quote referencing https://www.investopedia.com/terms/r/rule-10b5-1.asp https://www.investopedia.com/terms/r/rule-10b5-1.asp that seems unlikely.

AiApotheosis 7y ago

Is there another way they could have executed trades legally, without following rule 10b5-1? https://www.investopedia.com/terms/r/rule-10b5-1.asp https://www.investopedia.com/terms/r/rule-10b5-1.asp

hermitdev 7y ago
I think so, they still have to be publicly disclosed with an appropriate notice. I don't know the exact rules, but I think it typically has to be announced something like 30 days prior. May also involve restrictions around significant events such as earnings calls, quarterly events or shareholder meetings. I'm not aware of the details, as I'm just a peon in Back Office, but I do know traders pay attention to not-insider "insider" trading announcements from the SEC (yes, this pretrade information is publicly available from the SEC). I have no idea about non-US rules.

deleted 7y ago

[deleted]