4 ms·

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

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.)
      - boomboomsubban 6y ago
        >Do you think they just happened to be looking at their trading screens during that minute of the day? Or they set up something like an RSS feed and had their phones ring when a keyword was mentioned. Knowing the story is coming is enough to make sure you're prepared. Even if you did have advanced knowledge of when it was supposed to publish you would do this, so they can't betray you or nothing like a time zone mistake can ruin everything.
      - boomboomsubban 6y ago
        >Even if you have your phone with you at all times, you're not always able to respond to the alerts that come up. So you hire someone who is always able to respond. Both parts that yous claim are convincing circumstantial evidence just seem like expected behavior that could be entirely scripted. "Buy all x below y, after z happens sell all x" would lead to both things happening.
- SomewhatLikely 6y ago
  They stated the direction of information flow in the article: 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.” The indictment describes “numerous contacts” between Peltz and a reporter, including at least one in-person meeting
  - throwaway789256 6y ago
    Thanks, I should have included that up top, but can't edit now. I think the key words there are "just prior to." Other material information is that the story would be published at all.
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.

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.)
    - boomboomsubban 6y ago
      >Do you think they just happened to be looking at their trading screens during that minute of the day? Or they set up something like an RSS feed and had their phones ring when a keyword was mentioned. Knowing the story is coming is enough to make sure you're prepared. Even if you did have advanced knowledge of when it was supposed to publish you would do this, so they can't betray you or nothing like a time zone mistake can ruin everything.
    - boomboomsubban 6y ago
      >Even if you have your phone with you at all times, you're not always able to respond to the alerts that come up. So you hire someone who is always able to respond. Both parts that yous claim are convincing circumstantial evidence just seem like expected behavior that could be entirely scripted. "Buy all x below y, after z happens sell all x" would lead to both things happening.
SomewhatLikely 6y ago
They stated the direction of information flow in the article: 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.” The indictment describes “numerous contacts” between Peltz and a reporter, including at least one in-person meeting
- throwaway789256 6y ago
  Thanks, I should have included that up top, but can't edit now. I think the key words there are "just prior to." Other material information is that the story would be published at all.

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.