9 ms·

Feel like they were trying to get caught, communicating over text/email for insider trading isn't the brightest move. Then again, criminals usually aren't the s

Feel like they were trying to get caught, communicating over text/email for insider trading isn't the brightest move. Then again, criminals usually aren't the smartest.

orf 7y ago
> criminals usually aren’t the smartest Selection bias.
- tradertef 7y ago
  I was thinking exactly the same thing. I wonder how much is being made using insider trading and never got caught.
  - everdev 7y ago
    Anyone who consistently outperforms the market is a good candidate. My guess is if you're beating the market you're keeping it to yourself or a few high net worth clients.
    - imglorp 7y ago
      Sounds like playing in a casino. They're cool with it until you win too much.
      - everdev 7y ago
        Exactly. And to further the analogy it's challenging to tell the difference between investing and gambling.
    - arthurcolle 7y ago
      James Simons?
      - shagbag 7y ago
        Simons doesn't do insider trading. Arguably he paid long term capital gains on a basket that should have been short term capital gains. But his system of short term, automated, stat arb / signal detection based trades are clearly not based on classified corporate data. I suggest you read The Man Who Solved the Market for more info.
        deleted 7y ago
        [deleted]
        harry8 7y ago
        Well you don't know that, it's Simon's assertion that he doesn't do insider trading and whether you or I believe him (and I do, fwiw) stating that he doesn't as an incontravertable fact is going too far. "There's zero evidence that Simons and Renaissance do any insider trading." Is a better way to state it.
        shagbag 7y ago
        Simons is pretty reclusive, I don't think he's actually made an assertion about insider trading. Either way, you're right that I don't know for sure. But all evidence points to a system that runs in a mostly automated manner, which would be the opposite of what you'd expect from an insider trader. Someone who makes "gutsy calls" based on "intuition" like Steve Cohen is what I think most successful insider traders would look like.
        arthurcolle 7y ago
        Insider trading easily lends itself to automation depending on the level of conspiratorial thinking you're willing to accept. Consider the stakes - you have a multibillion dollar sub-portfolio (Medallion has current AUM of $118B according to some random site called InsiderMonkey, idk whether its legit or not). In 2016, the AUM was reported at $76B. His returns literally don't make any sense. You can't be right all the time. Anyways, so literally you wanna use a small fraction of that to fund the construction of a small discreet, strategic team that acquires information to gain edge in public markets. Simons has background in signals intelligence, and despite his later work, wouldn't it be an extremely obvious avenue to just forcibly acquire knowledge that is non-public and then place trades accordingly? Simplest explanation is its definitely illegal. Every couple years, you hire some algebraic geometry PhD and boom, you chalk up all your returns to magic math. Doesn't make any sense.
  - seriesf 7y ago
    The president of the United States engages in insider trading regularly, right in front of the whole world, on Twitter. We just don’t know who is getting the payoff.
    - bananabreakfast 7y ago
      Why is this downvoted? This is an openly true fact. The president literally tweets about the China trade deal to manipulate the market up and down. On top of that, the president and all of congress literally cannot be convicted of any crime while in office and they pretty much all engage in massive and rampant insider trading.
      - samdoidge 7y ago
        Where's the evidence?
        croon 7y ago
        https://en.wikipedia.org/wiki/Volfefe_index https://en.wikipedia.org/wiki/Volfefe_index Or one out of tons of specific companies: https://www.washingtonpost.com/news/the-fix/wp/2016/12/06/did-donald-trump-tank-boeings-stock-because-he-was-mad-about-a-news-article/ https://www.washingtonpost.com/news/the-fix/wp/2016/12/06/di...
      - datashow 7y ago
        I'm confused. Influencing the market is the same as insider trading?
        dboreham 7y ago
        The accusation is that someone else is doing the insider trading based on prior knowledge of the tweet content.
        datashow 7y ago
        The accusation: "The president of the United States engages in insider trading regularly, right in front of the whole world, on Twitter. " And "Why is this downvoted? This is an openly true fact." Apparently, they equal influencing the market to insider trading.
  - malux85 7y ago
    Ah, most of it? You know that dark pools of communication exist too right? They even have code words for the names of well known insider traders, e.g. Jacob Rees-Mogg, the UK politician is known as the “profiteering ghoul” because his massive short on the pound, why else was he pushing Brexit so much? The will of the people? Get real Which makes sense, do you think that given the financial amounts involved, and the only thing stopping most people is ethics (and knowledge that it’s illegal but easy to get away with) that it wouldn’t happen??
    - fortydegrees 7y ago
      Super interesting. Where is the best place to find out about JRM and the evidence that he does this?
      - malux85 7y ago
        I just told you, the communication dark pools. It’s not open to the public, you need a shibboleth
        jl6 7y ago
        And you found out about it how?
        thaumasiotes 7y ago
        The idea that there are groups of people communicating with each other privately doesn't really need a lot of evidence. It's 100% likely to be true. A better question would be "why do you think these specific people are coordinating with each other?".
        coralreef 7y ago
        It's 100% likely to be true. Uhh citation required
  - MiroF 7y ago
    My guess is very common. Even if you just look at stocks before a major announcement, they usually start trading in the right direction a few hours before the announcement.
    - icedchai 7y ago
      This cracks me up because of all the times I've seen that NOT happen. The stock drops actually drops big time after the announcement. Sometimes the news is "good" but doesn't meet expectations, so the stock drops. Maybe it was already priced in. Sometimes the news is "bad", but better than expected, so the stock goes up. Maybe that was already priced in, too. Either way "just looking at stocks before a major announcement" isn't going to get you anywhere fast.
- thepete2 7y ago
  absolutely, you never hear about the successful ones
  - TheSpiceIsLife 7y ago
    Not specifically, no. But organised crime is an ongoing concern.
aishvar 7y ago
> criminals usually aren't the smartest. Well, the ones getting caught definitely aren't.
- ct520 7y ago
  LOL I agree. I would expect a message board tied to entrepreneurship to have it fair share of risk takers. Maybe tech is different but most if not all the self made people I know uh were not always so squeaky clean, just good at not getting caught.
  - WheelsAtLarge 7y ago
    Successful entrepreneurs break the rules all the time. They just make sure they are not the type that will send them to jail. The perfect examples are Uber and Facebook. I'm sure their founders broke the rules left and right, and we've all read about some of the cases, as they grew their startups. The difference is that they were sure not to break the ones that got them in legal trouble.
    - TeMPOraL 7y ago
      Kind of. Uber's a bad example - that company turned breaking the law into a business model, using investment money to move fast and keep the lawmen at bay.
    - ct520 7y ago
      IMO I agree with your statement but I would not say they just make sure they are not the type that will send them to jail. More along the lines as - when they do take a risk that could line them in jail they are more prepared / smarter then the average criminal and avoid jail. (Civil lawsuits more likely)
seansmccullough 7y ago
https://www.google.com/amp/s/www.bloomberg.com/amp/opinion/articles/2018-08-12/the-10-laws-of-insider-trading https://www.google.com/amp/s/www.bloomberg.com/amp/opinion/a... It’s one of Matt Levine’s satirical rules of insider trading not to do that.
- eps 7y ago
  The original link, sans the Google junk - https://www.bloomberg.com/amp/opinion/articles/2018-08-12/the-10-laws-of-insider-trading https://www.bloomberg.com/amp/opinion/articles/2018-08-12/th...
  - seansmccullough 7y ago
    Sorry, I was on mobile.
NDizzle 7y ago
Prison, baby!

Feel like they were trying to get caught, communicating over text/email for insider trading isn't the brightest move. Then again, criminals usually aren't the smartest.

orf 7y ago

> criminals usually aren’t the smartest Selection bias.

tradertef 7y ago
I was thinking exactly the same thing. I wonder how much is being made using insider trading and never got caught.
- everdev 7y ago
  Anyone who consistently outperforms the market is a good candidate. My guess is if you're beating the market you're keeping it to yourself or a few high net worth clients.
  - imglorp 7y ago
    Sounds like playing in a casino. They're cool with it until you win too much.
    - everdev 7y ago
      Exactly. And to further the analogy it's challenging to tell the difference between investing and gambling.
  - arthurcolle 7y ago
    James Simons?
    - shagbag 7y ago
      Simons doesn't do insider trading. Arguably he paid long term capital gains on a basket that should have been short term capital gains. But his system of short term, automated, stat arb / signal detection based trades are clearly not based on classified corporate data. I suggest you read The Man Who Solved the Market for more info.
      - deleted 7y ago
        [deleted]
      - harry8 7y ago
        Well you don't know that, it's Simon's assertion that he doesn't do insider trading and whether you or I believe him (and I do, fwiw) stating that he doesn't as an incontravertable fact is going too far. "There's zero evidence that Simons and Renaissance do any insider trading." Is a better way to state it.
        shagbag 7y ago
        Simons is pretty reclusive, I don't think he's actually made an assertion about insider trading. Either way, you're right that I don't know for sure. But all evidence points to a system that runs in a mostly automated manner, which would be the opposite of what you'd expect from an insider trader. Someone who makes "gutsy calls" based on "intuition" like Steve Cohen is what I think most successful insider traders would look like.
        arthurcolle 7y ago
        Insider trading easily lends itself to automation depending on the level of conspiratorial thinking you're willing to accept. Consider the stakes - you have a multibillion dollar sub-portfolio (Medallion has current AUM of $118B according to some random site called InsiderMonkey, idk whether its legit or not). In 2016, the AUM was reported at $76B. His returns literally don't make any sense. You can't be right all the time. Anyways, so literally you wanna use a small fraction of that to fund the construction of a small discreet, strategic team that acquires information to gain edge in public markets. Simons has background in signals intelligence, and despite his later work, wouldn't it be an extremely obvious avenue to just forcibly acquire knowledge that is non-public and then place trades accordingly? Simplest explanation is its definitely illegal. Every couple years, you hire some algebraic geometry PhD and boom, you chalk up all your returns to magic math. Doesn't make any sense.
- seriesf 7y ago
  The president of the United States engages in insider trading regularly, right in front of the whole world, on Twitter. We just don’t know who is getting the payoff.
  - bananabreakfast 7y ago
    Why is this downvoted? This is an openly true fact. The president literally tweets about the China trade deal to manipulate the market up and down. On top of that, the president and all of congress literally cannot be convicted of any crime while in office and they pretty much all engage in massive and rampant insider trading.
    - samdoidge 7y ago
      Where's the evidence?
      - croon 7y ago
        https://en.wikipedia.org/wiki/Volfefe_index https://en.wikipedia.org/wiki/Volfefe_index Or one out of tons of specific companies: https://www.washingtonpost.com/news/the-fix/wp/2016/12/06/did-donald-trump-tank-boeings-stock-because-he-was-mad-about-a-news-article/ https://www.washingtonpost.com/news/the-fix/wp/2016/12/06/di...
    - datashow 7y ago
      I'm confused. Influencing the market is the same as insider trading?
      - dboreham 7y ago
        The accusation is that someone else is doing the insider trading based on prior knowledge of the tweet content.
        datashow 7y ago
        The accusation: "The president of the United States engages in insider trading regularly, right in front of the whole world, on Twitter. " And "Why is this downvoted? This is an openly true fact." Apparently, they equal influencing the market to insider trading.
- malux85 7y ago
  Ah, most of it? You know that dark pools of communication exist too right? They even have code words for the names of well known insider traders, e.g. Jacob Rees-Mogg, the UK politician is known as the “profiteering ghoul” because his massive short on the pound, why else was he pushing Brexit so much? The will of the people? Get real Which makes sense, do you think that given the financial amounts involved, and the only thing stopping most people is ethics (and knowledge that it’s illegal but easy to get away with) that it wouldn’t happen??
  - fortydegrees 7y ago
    Super interesting. Where is the best place to find out about JRM and the evidence that he does this?
    - malux85 7y ago
      I just told you, the communication dark pools. It’s not open to the public, you need a shibboleth
      - jl6 7y ago
        And you found out about it how?
        thaumasiotes 7y ago
        The idea that there are groups of people communicating with each other privately doesn't really need a lot of evidence. It's 100% likely to be true. A better question would be "why do you think these specific people are coordinating with each other?".
        coralreef 7y ago
        It's 100% likely to be true. Uhh citation required
- MiroF 7y ago
  My guess is very common. Even if you just look at stocks before a major announcement, they usually start trading in the right direction a few hours before the announcement.
  - icedchai 7y ago
    This cracks me up because of all the times I've seen that NOT happen. The stock drops actually drops big time after the announcement. Sometimes the news is "good" but doesn't meet expectations, so the stock drops. Maybe it was already priced in. Sometimes the news is "bad", but better than expected, so the stock goes up. Maybe that was already priced in, too. Either way "just looking at stocks before a major announcement" isn't going to get you anywhere fast.
thepete2 7y ago
absolutely, you never hear about the successful ones
- TheSpiceIsLife 7y ago
  Not specifically, no. But organised crime is an ongoing concern.

aishvar 7y ago

> criminals usually aren't the smartest. Well, the ones getting caught definitely aren't.

ct520 7y ago
LOL I agree. I would expect a message board tied to entrepreneurship to have it fair share of risk takers. Maybe tech is different but most if not all the self made people I know uh were not always so squeaky clean, just good at not getting caught.
- WheelsAtLarge 7y ago
  Successful entrepreneurs break the rules all the time. They just make sure they are not the type that will send them to jail. The perfect examples are Uber and Facebook. I'm sure their founders broke the rules left and right, and we've all read about some of the cases, as they grew their startups. The difference is that they were sure not to break the ones that got them in legal trouble.
  - TeMPOraL 7y ago
    Kind of. Uber's a bad example - that company turned breaking the law into a business model, using investment money to move fast and keep the lawmen at bay.
  - ct520 7y ago
    IMO I agree with your statement but I would not say they just make sure they are not the type that will send them to jail. More along the lines as - when they do take a risk that could line them in jail they are more prepared / smarter then the average criminal and avoid jail. (Civil lawsuits more likely)

seansmccullough 7y ago

https://www.google.com/amp/s/www.bloomberg.com/amp/opinion/articles/2018-08-12/the-10-laws-of-insider-trading https://www.google.com/amp/s/www.bloomberg.com/amp/opinion/a... It’s one of Matt Levine’s satirical rules of insider trading not to do that.

eps 7y ago
The original link, sans the Google junk - https://www.bloomberg.com/amp/opinion/articles/2018-08-12/the-10-laws-of-insider-trading https://www.bloomberg.com/amp/opinion/articles/2018-08-12/th...
- seansmccullough 7y ago
  Sorry, I was on mobile.

NDizzle 7y ago

Prison, baby!