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An insider-trading indictment shows ties to Bloomberg News scoops

throwaway789256 6y ago
An inside trader in the UK was also shown to be exchanging information with Bloomberg News's reporters: https://www.bnnbloomberg.ca/the-mystery-millionaire-who-haunted-london-s-insider-trading-trial-1.1281860 https://www.bnnbloomberg.ca/the-mystery-millionaire-who-haun... What's not being said here is that for the trader to have timed his bets so precisely, the reporter would have had to tell him when the story was coming out. The anonymous sources on Bloomberg M&A scoops all have insider information one way or the other (think "provider of professional services in the deal space"), otherwise they would have nothing to say. While many of them are not stupid enough to trade on that information, nearly all of them get some kind of benefit from it, usually in the form of two-way information exchange with the reporter. Since they work on deals, they want to know about deals, because their livelihoods depend on deal flow. VCs know this dynamic well, but they are far less regulated, because they primarily work with private companies, not public ones.
- mdeck_ 6y ago
  > What's not being said here is that for the trader to have timed his bets so precisely, the reporter would have had to tell him when the story was coming out. Based on what are you speculating this? I just looked at the indictment, which is linked in the article. Page 8 shows that the timeline between the relevant inside activity and the article’s appearance in Bloomberg running to multiple weeks or even a month. More generally, I don’t see anything that would require an inside trader to know exactly when a news story on these kinds of topics is going to come out. If they know a stock is likely going way up SOMETIME in the near future, that is enough to conclude that the trade is a sure bet. So, no need for a specific tip (as to article timing) from the reporter, and therefore presumably no need for complicity by the reporter. *I do not intend this comment to mean I believe the actual reporter actually was not complicit. I don’t know the facts of this case beyond what is stated in the story linked here.
  - throwaway789256 6y ago
    From the story: > Peltz bought Ferro stock via others’ accounts, culminating with his last purchase at 9:37 am on March 15, 2016, according to the indictment. > Around six or seven minutes after that final purchase, Bloomberg posted a scoop by Hammond and another Bloomberg reporter under the headline, “Ferro Said to Have Received Takeover Approach From Apollo,” a major private-equity firm. A 6-7 minute gap implies coordination and foreknowledge of when the story would go out.
    - kgwgk 6y ago
      I imagine that if the story has been published at 9:31 the purchase at 9:37 wouldn’t have happened and some other transaction would have been his last purchase. He may or may not have been aware of when the news would be published.
      - throwaway789256 6y ago
        That is logically plausible. An insider purchase that occurs minutes ahead of a market-moving event is merely circumstantial evidence, but it is very strong circumstantial evidence. One thing to note is that Peltz bought options as well as stock. Options suffer time decay. That is, all other things being equal, their value decreases with the passage of time. The better you can time your purchase to immediately precede a market-moving event, the less time decay matters. In addition, Peltz and his associates started selling their positions within a minute of the scoops being published. Do you think they just happened to be looking at their trading screens during that minute of the day? I don't think they would have left that to chance. (Edit in response to the comment below: Bloomberg scoops do not appear on the open Internet for at least 15 to 20 minutes after their publication on Bloomberg terminals. So RSS wouldn't explain trades within a minute of publication. If Peltz and his friends were Bloomberg terminal subscribers, they could have set up some kind of alert there, sure. But still, not something you want to leave to chance... Even if you have your phone with you at all times, you're not always able to respond to the alerts that come up.)
        6y ago
- downandout 6y ago
  The anonymous sources on Bloomberg M&A scoops all have insider information one way or the other Yes, but trading on nonpublic information is not illegal unless it was obtained from someone that the trader knew was breaching a duty to the corporation in disclosing it, and some form of compensation is paid to the person that breached it [1]. So it begs the question...how is simply receiving secondhand information from a reporter prosecutable? [1] https://www.msnbc.com/msnbc/wall-street-prosecutor-preet-bharara-insider-trading-getting-easier-msna528101 https://www.msnbc.com/msnbc/wall-street-prosecutor-preet-bha...
  - throwaway789256 6y ago
    I don't think they are prosecuting Peltz for getting the information from the reporter. They are prosecuting him for this: "Peltz obtained material nonpublic information about the private equity firm’s interest in Ferro from a member of Ferro’s Board of Directors (the “Ferro Insider”), and/or the Board member’s fiancée (now wife) (the “Ferro Insider’s Fiancée”)." https://www.sec.gov/litigation/complaints/2020/comp24998.pdf https://www.sec.gov/litigation/complaints/2020/comp24998.pdf Everybody knows that company board members are not allowed to share information about potential acquisitions. The information from the reporter was secondary, although still important, for Peltz to execute his plan.
    - downandout 6y ago
      For sure, that is illegal. But the whole crux of this article, including the title, is about him having made trades just before Bloomberg articles were released, and the article states that this was mentioned in detail in the indictment. It makes me wonder why that is at all relevant if that’s not what he is actually being prosecuted for.
      - throwaway789256 6y ago
        Tying insider trading to a Bloomberg reporter is very rare, although it has happened before, and I linked to one instance above. Because it is rare, it is newsworthy, particularly for the Columbia Journalism Review. Even if you don't care about journalism, the fact that one of the world's great news organizations and news wires has ties to insider trading should concern you and Bloomberg's top editors, because it's dirty. You just don't want your reporters abetting crimes if you can avoid it. My guess is that Hammond will not last long at Bloomberg. This story is more about the reporter than about the insider trading. And it is less about the law, and more about journalistic ethics. It doesn't matter whether it is illegal for the reporter to tell Peltz that the story will come out soon; it is certainly against his agreement with Bloomberg.
slymon99 6y ago
Honestly, who thinks they can get away with moronically obvious insider trading like this? "Oh, I know, I'll take large positions right before this reporter publishes MNPI, and I'll do it five times". Obviously you are going to get caught!
- onetimemanytime 6y ago
  do you think 100% of them get caught?
  - vmception 6y ago
    this is a pretty reliable way to get caught brokers and all licensed financial firms are essentially deputized to freeze and enforce this stuff on behalf of the regulator, who then has time to get a emergency asset freeze rubber stamped by an "administrator law judge" who basically works on staff at the regulatory agency then you can prove why you aren't guilty by retaining a good lawyer with all that other money you have which isn't frozen, you have that right? the better way is to use a bot to execute the trades right after publication, or do it manually and lose a little bit of alpha. but he didn't.
  - lordnacho 6y ago
    The ones who do it this way, yes. Maybe I'm reading it wrong, but it looks like he bought the stocks shortly before and then sold shortly after. That's going to show up in a simple search, and there's not a lot of alternative explanations for it.
    - p1necone 6y ago
      Statistically on any stock with a large trading volume there's pretty much always going to be someone who bought up right before a big announcement purely by chance, realized they got lucky and sold immediately afterwards. It's not obvious to me how you'd separate this from intentional trading on insider information. (Unless you just investigate everyone).
      - 6y ago
bin_bash 6y ago
Could something like this explain "The Big Hack"?
- wmf 6y ago
  Not really. That would require Bloomberg to deliberately fabricate a false story so that someone could do insider trading based on it.
  - bbarnett 6y ago
    They definitely fabricated a story, it could be a single reporter (the lead?), not the whole org, because, it makes as much sense as anything else. I still don't understand why no lawsuit.
    - alasdair_ 6y ago
      >I still don't understand why no lawsuit. I've seen (unsubstantiated) claims that there was a national security angle to the whole thing and everyone was told to shut up about it.
      - smolder 6y ago
        That's my hunch, based on the way the "debunking" of Bloomberg's articles was done (lots of people speaking from authority, poorly supported nitpicking about accuracy of illustration and other details, pointing to statements from the companies as authoritative) and the lack of retractions. I also got the sense that certain people who would normally like to speculate about the deeper story or provide historical context/additional flavor were unusually quiet.
        lawnchair_larry 6y ago
        If you’re talking about the SuperMicro reporting, this isn’t the case. It wasn’t nitpicking, it was a garbage story that was thoroughly debunked.
crazygringo 6y ago
This seems like a weasally headline to me. "Shows ties to Bloomberg News" makes it sound like Peltz was conspiring together with the Bloomberg journalist. When what's alleged is simply that Peltz was feeding the Bloomberg journalist legitimately publishable scoops. Peltz is rightly accused of insider trading. But Bloomberg appears to have done nothing wrong whatsoever.
- antrix 6y ago
  From the article, it seems the information was flowing _from_ the reporter: > The feds allege that Peltz used disposable “burner” phones and encrypted apps to communicate with a journalist, and that the reporter provided “material nonpublic information about forthcoming articles” which Peltz used to trade in the market “just prior to publication of an article about each company written by the reporter.”
  - mannykannot 6y ago
    News like this loses its value unless it is published immediately, so I would think the leaker is effectively in control of when it is published.
    - jsemrau 6y ago
      Trying to wrap my head around what you are trying to say. Let's use some example. If you would know that Tesla's delivery numbers were a disaster (they weren't). Knowing that before everybody else would give you a chance to sell at a significantly better price than others.
      - plouffy 6y ago
        Yes, but if you know exactly when everyone else find out you can time your trade more easily.
        theturtletalks 6y ago
JKCalhoun 6y ago
We must have a craving for justice — I feel lifted somehow when I read about criminals being caught.
- toss1 6y ago
  Could be a combo of that and schadenfreude ... but the deserved justice does make it seem more satisfying
- colechristensen 6y ago
  Yes, this is where witch hunts come from. People like feeling like there are bad people out there and that they have been punished. It can be a dangerous thing, seeking out that feeling, justice should be blind and based on reason, not an emotional high.
frakkingcylons 6y ago
It seems ethically dubious to publicly name a Bloomberg reporter based only on circumstantial evidence. Don’t get me wrong, it is awfully suspicious that the stories’ timestamps match closely. But I wonder if there’s other info they have that links the reporter to Peltz.
- space_rock 6y ago
  What is the issue with circumstantial evidence? DNA evidence and fingerprint evidence is some of the most important evidence
  - frakkingcylons 6y ago
    There is no issue when paired with evidence that is directly incriminating. But calling someone out by name on circumstance alone is questionable (in my personal opinion).
raymondh 6y ago
Life imitates art. "Blue horseshoe loves Anacott Steel" – Gordon Gecko, Wall Street https://www.youtube.com/watch?v=h8PLrkEXWnc https://www.youtube.com/watch?v=h8PLrkEXWnc
- kortilla 6y ago
  That movie didn’t invent the scheme...
msikora 6y ago
What exactly is insider trading? Last year, if I remember correctly, Facebook released “Messenger Rooms” and it tanked Zoom stock quite a bit when they announced this. If you were A Facebook engineer and loaded up on ZM puts just before the announcement, would that be an insider trading? With the right ZM puts you would be able to profit immensely.
- deleted 6y ago
  [deleted]
- montagg 6y ago
  Yes. From [Investopedia][1]: > Insider trading involves trading in a public company's stock by someone who has non-public, material information about that stock for any reason. [1]: https://www.investopedia.com/terms/i/insidertrading.asp https://www.investopedia.com/terms/i/insidertrading.asp)
  - IfOnlyYouKnew 6y ago
    ...and has a duty to the company to keep such information secret. If you’re an employee, you can’t trade on it. Same if you work at the accountancy that does the company’s financials. If, however, you hear some employees talking about it in public, it’s fair game. Or if you notice Facebook hiring lots of people with expertise in live audio broadcasting.
  - alasdair_ 6y ago
    It's not quite that simple. If you were in a café and overheard the CEO of some company telling someone else that next quarter will be fantastic, that's non-public material information but you have no duty to keep it secret.
  - kortilla 6y ago
    That’s incorrect. If you overhear a CEO complaining to someone about how terrible they are doing that quarter, you can absolutely trade on that. If you’re an expert in deriving sales from Bluetooth beacon data you have not available to the public, you can use that to trade as well.
deleted 6y ago
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IfOnlyYouKnew 6y ago
This article explicitly states for one case it describes that the indicted trader received the insider information from a third party, not the journalist. So it seems the flow of information was from him to the journalist, not the other way around. The purpose would be to get the news out there fast after buying into the stock, as otherwise it may take months for it to be released the normal way or, in some cases such as mergers not yet finalized, to fall through completely. As such, the journalist wouldn’t have done anything wrong. Receiving and publishing inside information is their job, and as long as the information is accurate it isn’t their job to make up for a lack of secrecy on the company’s part. Since the information was already circulating among unauthorized traders, making it public actually serves to level the playing field and prevent further harm.
swim1234 6y ago
I wonder how much insider trading really happens, even somewhat innocently. Someone who isn't me (SWIM) was once upon a time casually talking to his colleague (who has insider info) about their company stock. SWIM wanted to sell some of his shares before earning report as they often tanked. Colleague said that the numbers will be good as they want to make the new CEO to look good. SWIM kept his stock past the ER and indeed it mooned. I think this may be insider trading, but also it may be happening all the time everywhere, most of the time unintentionally...
- alasdair_ 6y ago
  Failing to make a trade is not the same thing as insider trading. There is actually a loophole available to executives and other insiders right now that exploits this fact - you can file a 10b5-1 plan with your broker, which allows executives to say "I'm going to sell my shares according to this schedule" and bypasses blackout periods etc. You can then cancel the plan if the numbers look really good and you want to hang on to the shares. No crime has occurred since you didn't actually trade any shares, you simply failed to trade some shares you normally would have.
- psds2 6y ago
  I would think it's a lot harder to prove when the result of learning the information results in no action.
- deleted 6y ago
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deleted 6y ago
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worik 6y ago
This is huge. Insider trading is a crime, Bloomberg is a institution. This is another thread pulled from the weave of the organised criminal network known as "the Financial System" Another brick in the wall....
- astrange 6y ago
  Journalists don't have a duty to not publish secret information.
  - worik 6y ago
    There is a law against them colluding with insiders for gain.
    - astrange 6y ago
      Sure, you can pass a law that violates freedom of the press, but that doesn’t mean you can enforce it.
      - worik 6y ago
        How is this possibly a freedom of the press issue? It is about insiders exploiting their information for financial gain. It is about crime.
        astrange 6y ago
        The journalists weren't trading. They are gaining because they're paid to write articles, but you can't make that illegal.
coliveira 6y ago
The only kind of insider information that you get you in trouble is the one done by (relatively) small operators in the market. If, on the other hand, you talk to directors in a company and, based on the insider knowledge you learn from them about the business, make a large investment, then you're called a smart and sophisticated investor (the biggest example is Warren Buffet).
whakim 6y ago
While I understand that insider training is illegal, I do find it pretty ironic that part of the "value prop" of a Bloomberg Terminal is that you pay money to get access to market information before everyone else does.
- frakkingcylons 6y ago
  That's not the value proposition of a terminal subscription. All the noteworthy players in finance have a terminal too, everyone is getting the news at the same time. To clarify, the value of a terminal subscription broadly speaking is (1) access to the social network of instant chat and email (2) 24/7 highly qualified customer support who will respond within tens of seconds (3) bundled access to all sorts of financial apps (functions)
nobrains 6y ago
He could have avoided being indicted just by making the trades immediately after the publication of the news. So he could have been ready with his stock, amount and direction (buy vs. sell), and then do it immediately upon the publication, still giving him a time edge while having plausible deniability by claiming that he acted in public news.
- darawk 6y ago
  HFTs parse news like this the microsecond it comes out, so you wouldn't beat them. You might still be able to make some gains, but they'd be lower than trading ahead of time.
jrib 6y ago
direct link to the indictment (also in the article): https://www.justice.gov/usao-edny/press-release/file/1379176/download https://www.justice.gov/usao-edny/press-release/file/1379176... I was mostly curious about details regarding > ...and also communicated via the use of smartphone applications with end-to-end encryption but there aren't many that I can tell.

An inside trader in the UK was also shown to be exchanging information with Bloomberg News's reporters: https://www.bnnbloomberg.ca/the-mystery-millionaire-who-haunted-london-s-insider-trading-trial-1.1281860 https://www.bnnbloomberg.ca/the-mystery-millionaire-who-haun... What's not being said here is that for the trader to have timed his bets so precisely, the reporter would have had to tell him when the story was coming out. The anonymous sources on Bloomberg M&A scoops all have insider information one way or the other (think "provider of professional services in the deal space"), otherwise they would have nothing to say. While many of them are not stupid enough to trade on that information, nearly all of them get some kind of benefit from it, usually in the form of two-way information exchange with the reporter. Since they work on deals, they want to know about deals, because their livelihoods depend on deal flow. VCs know this dynamic well, but they are far less regulated, because they primarily work with private companies, not public ones.

mdeck_ 6y ago
> What's not being said here is that for the trader to have timed his bets so precisely, the reporter would have had to tell him when the story was coming out. Based on what are you speculating this? I just looked at the indictment, which is linked in the article. Page 8 shows that the timeline between the relevant inside activity and the article’s appearance in Bloomberg running to multiple weeks or even a month. More generally, I don’t see anything that would require an inside trader to know exactly when a news story on these kinds of topics is going to come out. If they know a stock is likely going way up SOMETIME in the near future, that is enough to conclude that the trade is a sure bet. So, no need for a specific tip (as to article timing) from the reporter, and therefore presumably no need for complicity by the reporter. *I do not intend this comment to mean I believe the actual reporter actually was not complicit. I don’t know the facts of this case beyond what is stated in the story linked here.
- throwaway789256 6y ago
  From the story: > Peltz bought Ferro stock via others’ accounts, culminating with his last purchase at 9:37 am on March 15, 2016, according to the indictment. > Around six or seven minutes after that final purchase, Bloomberg posted a scoop by Hammond and another Bloomberg reporter under the headline, “Ferro Said to Have Received Takeover Approach From Apollo,” a major private-equity firm. A 6-7 minute gap implies coordination and foreknowledge of when the story would go out.
  - kgwgk 6y ago
    I imagine that if the story has been published at 9:31 the purchase at 9:37 wouldn’t have happened and some other transaction would have been his last purchase. He may or may not have been aware of when the news would be published.
    - throwaway789256 6y ago
      That is logically plausible. An insider purchase that occurs minutes ahead of a market-moving event is merely circumstantial evidence, but it is very strong circumstantial evidence. One thing to note is that Peltz bought options as well as stock. Options suffer time decay. That is, all other things being equal, their value decreases with the passage of time. The better you can time your purchase to immediately precede a market-moving event, the less time decay matters. In addition, Peltz and his associates started selling their positions within a minute of the scoops being published. Do you think they just happened to be looking at their trading screens during that minute of the day? I don't think they would have left that to chance. (Edit in response to the comment below: Bloomberg scoops do not appear on the open Internet for at least 15 to 20 minutes after their publication on Bloomberg terminals. So RSS wouldn't explain trades within a minute of publication. If Peltz and his friends were Bloomberg terminal subscribers, they could have set up some kind of alert there, sure. But still, not something you want to leave to chance... Even if you have your phone with you at all times, you're not always able to respond to the alerts that come up.)
      - 6y ago
downandout 6y ago
The anonymous sources on Bloomberg M&A scoops all have insider information one way or the other Yes, but trading on nonpublic information is not illegal unless it was obtained from someone that the trader knew was breaching a duty to the corporation in disclosing it, and some form of compensation is paid to the person that breached it [1]. So it begs the question...how is simply receiving secondhand information from a reporter prosecutable? [1] https://www.msnbc.com/msnbc/wall-street-prosecutor-preet-bharara-insider-trading-getting-easier-msna528101 https://www.msnbc.com/msnbc/wall-street-prosecutor-preet-bha...
- throwaway789256 6y ago
  I don't think they are prosecuting Peltz for getting the information from the reporter. They are prosecuting him for this: "Peltz obtained material nonpublic information about the private equity firm’s interest in Ferro from a member of Ferro’s Board of Directors (the “Ferro Insider”), and/or the Board member’s fiancée (now wife) (the “Ferro Insider’s Fiancée”)." https://www.sec.gov/litigation/complaints/2020/comp24998.pdf https://www.sec.gov/litigation/complaints/2020/comp24998.pdf Everybody knows that company board members are not allowed to share information about potential acquisitions. The information from the reporter was secondary, although still important, for Peltz to execute his plan.
  - downandout 6y ago
    For sure, that is illegal. But the whole crux of this article, including the title, is about him having made trades just before Bloomberg articles were released, and the article states that this was mentioned in detail in the indictment. It makes me wonder why that is at all relevant if that’s not what he is actually being prosecuted for.
    - throwaway789256 6y ago
      Tying insider trading to a Bloomberg reporter is very rare, although it has happened before, and I linked to one instance above. Because it is rare, it is newsworthy, particularly for the Columbia Journalism Review. Even if you don't care about journalism, the fact that one of the world's great news organizations and news wires has ties to insider trading should concern you and Bloomberg's top editors, because it's dirty. You just don't want your reporters abetting crimes if you can avoid it. My guess is that Hammond will not last long at Bloomberg. This story is more about the reporter than about the insider trading. And it is less about the law, and more about journalistic ethics. It doesn't matter whether it is illegal for the reporter to tell Peltz that the story will come out soon; it is certainly against his agreement with Bloomberg.

slymon99 6y ago

Honestly, who thinks they can get away with moronically obvious insider trading like this? "Oh, I know, I'll take large positions right before this reporter publishes MNPI, and I'll do it five times". Obviously you are going to get caught!

onetimemanytime 6y ago
do you think 100% of them get caught?
- vmception 6y ago
  this is a pretty reliable way to get caught brokers and all licensed financial firms are essentially deputized to freeze and enforce this stuff on behalf of the regulator, who then has time to get a emergency asset freeze rubber stamped by an "administrator law judge" who basically works on staff at the regulatory agency then you can prove why you aren't guilty by retaining a good lawyer with all that other money you have which isn't frozen, you have that right? the better way is to use a bot to execute the trades right after publication, or do it manually and lose a little bit of alpha. but he didn't.
- lordnacho 6y ago
  The ones who do it this way, yes. Maybe I'm reading it wrong, but it looks like he bought the stocks shortly before and then sold shortly after. That's going to show up in a simple search, and there's not a lot of alternative explanations for it.
  - p1necone 6y ago
    Statistically on any stock with a large trading volume there's pretty much always going to be someone who bought up right before a big announcement purely by chance, realized they got lucky and sold immediately afterwards. It's not obvious to me how you'd separate this from intentional trading on insider information. (Unless you just investigate everyone).
    - 6y ago

bin_bash 6y ago

Could something like this explain "The Big Hack"?

wmf 6y ago
Not really. That would require Bloomberg to deliberately fabricate a false story so that someone could do insider trading based on it.
- bbarnett 6y ago
  They definitely fabricated a story, it could be a single reporter (the lead?), not the whole org, because, it makes as much sense as anything else. I still don't understand why no lawsuit.
  - alasdair_ 6y ago
    >I still don't understand why no lawsuit. I've seen (unsubstantiated) claims that there was a national security angle to the whole thing and everyone was told to shut up about it.
    - smolder 6y ago
      That's my hunch, based on the way the "debunking" of Bloomberg's articles was done (lots of people speaking from authority, poorly supported nitpicking about accuracy of illustration and other details, pointing to statements from the companies as authoritative) and the lack of retractions. I also got the sense that certain people who would normally like to speculate about the deeper story or provide historical context/additional flavor were unusually quiet.
      - lawnchair_larry 6y ago
        If you’re talking about the SuperMicro reporting, this isn’t the case. It wasn’t nitpicking, it was a garbage story that was thoroughly debunked.

crazygringo 6y ago

This seems like a weasally headline to me. "Shows ties to Bloomberg News" makes it sound like Peltz was conspiring together with the Bloomberg journalist. When what's alleged is simply that Peltz was feeding the Bloomberg journalist legitimately publishable scoops. Peltz is rightly accused of insider trading. But Bloomberg appears to have done nothing wrong whatsoever.

antrix 6y ago
From the article, it seems the information was flowing _from_ the reporter: > The feds allege that Peltz used disposable “burner” phones and encrypted apps to communicate with a journalist, and that the reporter provided “material nonpublic information about forthcoming articles” which Peltz used to trade in the market “just prior to publication of an article about each company written by the reporter.”
- mannykannot 6y ago
  News like this loses its value unless it is published immediately, so I would think the leaker is effectively in control of when it is published.
  - jsemrau 6y ago
    Trying to wrap my head around what you are trying to say. Let's use some example. If you would know that Tesla's delivery numbers were a disaster (they weren't). Knowing that before everybody else would give you a chance to sell at a significantly better price than others.
    - plouffy 6y ago
      Yes, but if you know exactly when everyone else find out you can time your trade more easily.
      - theturtletalks 6y ago

JKCalhoun 6y ago

We must have a craving for justice — I feel lifted somehow when I read about criminals being caught.

toss1 6y ago
Could be a combo of that and schadenfreude ... but the deserved justice does make it seem more satisfying
colechristensen 6y ago
Yes, this is where witch hunts come from. People like feeling like there are bad people out there and that they have been punished. It can be a dangerous thing, seeking out that feeling, justice should be blind and based on reason, not an emotional high.

frakkingcylons 6y ago

It seems ethically dubious to publicly name a Bloomberg reporter based only on circumstantial evidence. Don’t get me wrong, it is awfully suspicious that the stories’ timestamps match closely. But I wonder if there’s other info they have that links the reporter to Peltz.

space_rock 6y ago
What is the issue with circumstantial evidence? DNA evidence and fingerprint evidence is some of the most important evidence
- frakkingcylons 6y ago
  There is no issue when paired with evidence that is directly incriminating. But calling someone out by name on circumstance alone is questionable (in my personal opinion).

raymondh 6y ago

Life imitates art. "Blue horseshoe loves Anacott Steel" – Gordon Gecko, Wall Street https://www.youtube.com/watch?v=h8PLrkEXWnc https://www.youtube.com/watch?v=h8PLrkEXWnc

kortilla 6y ago
That movie didn’t invent the scheme...

msikora 6y ago

What exactly is insider trading? Last year, if I remember correctly, Facebook released “Messenger Rooms” and it tanked Zoom stock quite a bit when they announced this. If you were A Facebook engineer and loaded up on ZM puts just before the announcement, would that be an insider trading? With the right ZM puts you would be able to profit immensely.

deleted 6y ago
[deleted]
montagg 6y ago
Yes. From [Investopedia][1]: > Insider trading involves trading in a public company's stock by someone who has non-public, material information about that stock for any reason. [1]: https://www.investopedia.com/terms/i/insidertrading.asp https://www.investopedia.com/terms/i/insidertrading.asp)
- IfOnlyYouKnew 6y ago
  ...and has a duty to the company to keep such information secret. If you’re an employee, you can’t trade on it. Same if you work at the accountancy that does the company’s financials. If, however, you hear some employees talking about it in public, it’s fair game. Or if you notice Facebook hiring lots of people with expertise in live audio broadcasting.
- alasdair_ 6y ago
  It's not quite that simple. If you were in a café and overheard the CEO of some company telling someone else that next quarter will be fantastic, that's non-public material information but you have no duty to keep it secret.
- kortilla 6y ago
  That’s incorrect. If you overhear a CEO complaining to someone about how terrible they are doing that quarter, you can absolutely trade on that. If you’re an expert in deriving sales from Bluetooth beacon data you have not available to the public, you can use that to trade as well.

deleted 6y ago

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IfOnlyYouKnew 6y ago

This article explicitly states for one case it describes that the indicted trader received the insider information from a third party, not the journalist. So it seems the flow of information was from him to the journalist, not the other way around. The purpose would be to get the news out there fast after buying into the stock, as otherwise it may take months for it to be released the normal way or, in some cases such as mergers not yet finalized, to fall through completely. As such, the journalist wouldn’t have done anything wrong. Receiving and publishing inside information is their job, and as long as the information is accurate it isn’t their job to make up for a lack of secrecy on the company’s part. Since the information was already circulating among unauthorized traders, making it public actually serves to level the playing field and prevent further harm.

swim1234 6y ago

I wonder how much insider trading really happens, even somewhat innocently. Someone who isn't me (SWIM) was once upon a time casually talking to his colleague (who has insider info) about their company stock. SWIM wanted to sell some of his shares before earning report as they often tanked. Colleague said that the numbers will be good as they want to make the new CEO to look good. SWIM kept his stock past the ER and indeed it mooned. I think this may be insider trading, but also it may be happening all the time everywhere, most of the time unintentionally...

alasdair_ 6y ago
Failing to make a trade is not the same thing as insider trading. There is actually a loophole available to executives and other insiders right now that exploits this fact - you can file a 10b5-1 plan with your broker, which allows executives to say "I'm going to sell my shares according to this schedule" and bypasses blackout periods etc. You can then cancel the plan if the numbers look really good and you want to hang on to the shares. No crime has occurred since you didn't actually trade any shares, you simply failed to trade some shares you normally would have.
psds2 6y ago
I would think it's a lot harder to prove when the result of learning the information results in no action.
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worik 6y ago

This is huge. Insider trading is a crime, Bloomberg is a institution. This is another thread pulled from the weave of the organised criminal network known as "the Financial System" Another brick in the wall....

astrange 6y ago
Journalists don't have a duty to not publish secret information.
- worik 6y ago
  There is a law against them colluding with insiders for gain.
  - astrange 6y ago
    Sure, you can pass a law that violates freedom of the press, but that doesn’t mean you can enforce it.
    - worik 6y ago
      How is this possibly a freedom of the press issue? It is about insiders exploiting their information for financial gain. It is about crime.
      - astrange 6y ago
        The journalists weren't trading. They are gaining because they're paid to write articles, but you can't make that illegal.

coliveira 6y ago

The only kind of insider information that you get you in trouble is the one done by (relatively) small operators in the market. If, on the other hand, you talk to directors in a company and, based on the insider knowledge you learn from them about the business, make a large investment, then you're called a smart and sophisticated investor (the biggest example is Warren Buffet).

whakim 6y ago

While I understand that insider training is illegal, I do find it pretty ironic that part of the "value prop" of a Bloomberg Terminal is that you pay money to get access to market information before everyone else does.

frakkingcylons 6y ago
That's not the value proposition of a terminal subscription. All the noteworthy players in finance have a terminal too, everyone is getting the news at the same time. To clarify, the value of a terminal subscription broadly speaking is (1) access to the social network of instant chat and email (2) 24/7 highly qualified customer support who will respond within tens of seconds (3) bundled access to all sorts of financial apps (functions)

nobrains 6y ago

He could have avoided being indicted just by making the trades immediately after the publication of the news. So he could have been ready with his stock, amount and direction (buy vs. sell), and then do it immediately upon the publication, still giving him a time edge while having plausible deniability by claiming that he acted in public news.

darawk 6y ago
HFTs parse news like this the microsecond it comes out, so you wouldn't beat them. You might still be able to make some gains, but they'd be lower than trading ahead of time.

jrib 6y ago

direct link to the indictment (also in the article): https://www.justice.gov/usao-edny/press-release/file/1379176/download https://www.justice.gov/usao-edny/press-release/file/1379176... I was mostly curious about details regarding > ...and also communicated via the use of smartphone applications with end-to-end encryption but there aren't many that I can tell.