6 ms·

As alleged, the family reaped illicit profits of approximately $1.4 million from their unlawful trading in Amazon securities. Did anyone really need insider in

As alleged, the family reaped illicit profits of approximately $1.4 million from their unlawful trading in Amazon securities. Did anyone really need insider information to know Amazon stock was going to rise? Although $1.4 million is life changing amount of money, I feel like for these people who were already being generously compensated in Amazon stock, it probably wasn't worth the risk, especially given the quote below. Laksha Bohra, the SEC’s civil complaint alleged, ignored numerous reminders from Amazon not to divulge confidential financial information or to illegally trade in the company’s securities based on what she knew about the company’s financial position — even after a former colleague pleaded guilty to insider trading in 2017, earning him six months in prison. [1] [1] https://www.seattletimes.com/business/amazon/feds-charge-seattle-area-amazon-employee-with-insider-trading/ https://www.seattletimes.com/business/amazon/feds-charge-sea...

mdoms 6y ago
> Did anyone really need insider information to know Amazon stock was going to rise? Did you invest? Did everyone you know invest? Did you time it as well as the alleged offender?
- notional 6y ago
  Did I invest? Yes, my compensation was in part Amazon stock. Pretty much everyone I knew also invested. What is timing if you don't plan to sell short term? As far as I can tell, this charge is about buying not selling stock.
  - celticninja 6y ago
    It's about buying it with insider knowledge that the quarterly earnings call would be positive and lead to a rise in price. So the intent is to sell that stock when you know the price has gone up to guarantee a return. The issue is the knowledge they used to make that decision was not public record.
  - shitlord 6y ago
    Amazon generally doesn't allow employees to purchase AMZN options.
deleted 6y ago
[deleted]
TallGuyShort 6y ago
If it really is widely known that a stock will definitely rise at some point in the future, that very quickly gets priced into the stock price now. It goes up gradually as confidence that it will go up goes up.
- notional 6y ago
  And looking at AMZN stock price it has risen consistently since IPO. Yall take things waayyy too seriously to not understand the humour in stating the obvious of Amazon's stock price though.
  - kube-system 6y ago
    That would be relevant if these were stocks bought at IPO, or bought and held for the long term. This situation was neither of those. AMZN fluctuates in the short term like any other stock.
  - sokoloff 6y ago
    > looking at AMZN stock price it has risen consistently since IPO. We might have different definitions of "risen consistently". AMZN traded as high as $105.06 in 1999 down over 94% to as low as $5.97 in 2001.
- celticninja 6y ago
  Sort of true, but alsorts of issues can leap in unannounced and shoot your plans in the foot. You can prove in covid now but was it priced in in January, February, March, definitely by April for the majority.
kube-system 6y ago
> Did anyone really need insider information to know Amazon stock was going to rise? 1. The complaint also lists allegations of profits made from put options. 2. Many of the other allegations in the complaint are also for short term options, which wouldn't really be helped at all by a long-term expectation of a rise in Amazon's stock. These are bets on single day movements made upon earnings announcements. 3. Legally, it doesn't matter if the inside information was plausible or implausible, helpful or unhelpful. All that matters is that a trade was made using privileged information that isn't available to the rest of the market.
renewiltord 6y ago
Haha, that's funny. But no, usually with options the hard part is pricing it accurately. So, for instance, if you look at AMZN for next July, you'll see the options are very expensive. AMZN may well rise but unless you know better you will still lose money on OTM calls. That's because the option has a time value (which depreciates by theta) and a stock correlation (which says how much it goes up by an increase in the stock). You need the stock to go up faster than the market currently believes it will in order to make money on OTM calls. TANSTAAFL. You can't just buy OTM options and make money.

mdoms 6y ago

> Did anyone really need insider information to know Amazon stock was going to rise? Did you invest? Did everyone you know invest? Did you time it as well as the alleged offender?

notional 6y ago
Did I invest? Yes, my compensation was in part Amazon stock. Pretty much everyone I knew also invested. What is timing if you don't plan to sell short term? As far as I can tell, this charge is about buying not selling stock.
- celticninja 6y ago
  It's about buying it with insider knowledge that the quarterly earnings call would be positive and lead to a rise in price. So the intent is to sell that stock when you know the price has gone up to guarantee a return. The issue is the knowledge they used to make that decision was not public record.
- shitlord 6y ago
  Amazon generally doesn't allow employees to purchase AMZN options.

deleted 6y ago

[deleted]

TallGuyShort 6y ago

If it really is widely known that a stock will definitely rise at some point in the future, that very quickly gets priced into the stock price now. It goes up gradually as confidence that it will go up goes up.

notional 6y ago
And looking at AMZN stock price it has risen consistently since IPO. Yall take things waayyy too seriously to not understand the humour in stating the obvious of Amazon's stock price though.
- kube-system 6y ago
  That would be relevant if these were stocks bought at IPO, or bought and held for the long term. This situation was neither of those. AMZN fluctuates in the short term like any other stock.
- sokoloff 6y ago
  > looking at AMZN stock price it has risen consistently since IPO. We might have different definitions of "risen consistently". AMZN traded as high as $105.06 in 1999 down over 94% to as low as $5.97 in 2001.
celticninja 6y ago
Sort of true, but alsorts of issues can leap in unannounced and shoot your plans in the foot. You can prove in covid now but was it priced in in January, February, March, definitely by April for the majority.

kube-system 6y ago

> Did anyone really need insider information to know Amazon stock was going to rise? 1. The complaint also lists allegations of profits made from put options. 2. Many of the other allegations in the complaint are also for short term options, which wouldn't really be helped at all by a long-term expectation of a rise in Amazon's stock. These are bets on single day movements made upon earnings announcements. 3. Legally, it doesn't matter if the inside information was plausible or implausible, helpful or unhelpful. All that matters is that a trade was made using privileged information that isn't available to the rest of the market.

renewiltord 6y ago

Haha, that's funny. But no, usually with options the hard part is pricing it accurately. So, for instance, if you look at AMZN for next July, you'll see the options are very expensive. AMZN may well rise but unless you know better you will still lose money on OTM calls. That's because the option has a time value (which depreciates by theta) and a stock correlation (which says how much it goes up by an increase in the stock). You need the stock to go up faster than the market currently believes it will in order to make money on OTM calls. TANSTAAFL. You can't just buy OTM options and make money.