4 ms·

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).
  - lordnacho 6y ago
    You'll find that even on some fairly large names there isn't all that much activity during the day. There's a lot of names, and there's a lot of trading in the auctions, so the total volume in the market won't result in a steady flow for a particular share. My guess is it will stick out like a sore thumb if you buy x shares right before an announcement and sell x right after. Especially if you do nothing else. Pretty much as soon as you've exited a second announcement-trade red lights should be flashing.
  - dasudasu 6y ago
    They don't prosecute for a random one off. It's always people that have done it multiple times, so they establish a pattern.
    - hansvm 6y ago
      Some napkin math suggests that there are enough retail trades (8.1M/day) that under some weak constraints (most are for short-term positions, higher market cap stocks are more likely to be purchased) you're still quite likely to find a few people who have "established a pattern" quite by accident. As long as they're just investigating and not necessarily prosecuting every event that probably sounds fine (I'd be curious to know what the prosecution "funnel" looks like for flagged individuals in real life -- 100%? 1%?), but it's important not to let an intuitive sense for things that are definitely too unlikely to happen by chance to cloud our judgement and create something like another Sally Clark event[0]. [0] https://en.wikipedia.org/wiki/Sally_Clark https://en.wikipedia.org/wiki/Sally_Clark

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).
- lordnacho 6y ago
  You'll find that even on some fairly large names there isn't all that much activity during the day. There's a lot of names, and there's a lot of trading in the auctions, so the total volume in the market won't result in a steady flow for a particular share. My guess is it will stick out like a sore thumb if you buy x shares right before an announcement and sell x right after. Especially if you do nothing else. Pretty much as soon as you've exited a second announcement-trade red lights should be flashing.
- dasudasu 6y ago
  They don't prosecute for a random one off. It's always people that have done it multiple times, so they establish a pattern.
  - hansvm 6y ago
    Some napkin math suggests that there are enough retail trades (8.1M/day) that under some weak constraints (most are for short-term positions, higher market cap stocks are more likely to be purchased) you're still quite likely to find a few people who have "established a pattern" quite by accident. As long as they're just investigating and not necessarily prosecuting every event that probably sounds fine (I'd be curious to know what the prosecution "funnel" looks like for flagged individuals in real life -- 100%? 1%?), but it's important not to let an intuitive sense for things that are definitely too unlikely to happen by chance to cloud our judgement and create something like another Sally Clark event[0]. [0] https://en.wikipedia.org/wiki/Sally_Clark https://en.wikipedia.org/wiki/Sally_Clark