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Husband of Amazon employee sentenced to prison for insider trading Amazon stock
- lizdax 5y ago>he obtained from his wife, an Amazon finance employee, to place trades in Amazon stock–making a profit of $1,428,264 >Bohra engaged in illegal insider trading in advance of 11 straight earnings announcements.” >He and his family members have paid $2,652,899 in disgorgement, interest and penalties. And 26 months in prison! This is why if you're going to do any kind of trading yourself -- never touch the company you work for. Some more info on the original SEC filing as well: https://www.sec.gov/litigation/complaints/2020/comp24923.pdf https://www.sec.gov/litigation/complaints/2020/comp24923.pdf
- samfisher83 5y agoHow did his wife get no prison time?
- SommaRaikkonen 5y agoFrom the article > As part of the plea agreement, Bohra’s wife will not face criminal charges. Bohra’s wife is no longer employed at Amazon.
- samfisher83 5y agoI understand the plea deal, but why. I am assuming they had evidence she gave him the data. Why let her off?
- ALittleLight 5y agoMay be they would have to risk a trial to convict both but he would plea guilty to protect his wife. If the state believes he was the most responsible then they may judge a guaranteed conviction without the cost of trial to be worth it. The wife (and family) lost 2.6 million, plus her job, and the husband - so it's not like she got away with something, just avoided the worst of the punishment.
- ycombobreaker 5y agodisgorged 2.6 million, that means just losing the ill-gotten gains. It's not fair to call that "lost".
- loeg 5y agoNo. $2.6M "in disgorgement, interest and penalties." The ill-gotten gains were only $1.4M. They had to pay back their gains, pay additional fees, and one of them serves jail time. They did not get away with anything.
- viraptor 5y agoIf they kept the $2.6M in a liquid saving account just for cases like this one, yeah, that wouldn't be so bad. But I don't expect that's the case and in practice that could mean for example losing her house.
- chews 5y agoif you don't personally profit from the bet... it's not one.
- deleted 5y ago[deleted]
- Thorrez 5y ago>Insider trading violations may also include "tipping" such information, securities trading by the person "tipped," and securities trading by those who misappropriate such information. It sounds to me like even giving information to someone if you know that person will trade is illegal. https://www.investor.gov/introduction-investing/investing-basics/glossary/insider-trading https://www.investor.gov/introduction-investing/investing-ba...
- lelanthran 5y ago> I understand the plea deal, but why. I am assuming they had evidence she gave him the data. Why let her off? "Giving someone the data" is probably a different violation to "trading with illegally obtained data". She probably got a different penalty (breaking NDA or similar) then he did.
- deleted 5y ago[deleted]
- nprz 5y agoThey can't arrest a husband and wife for the same crime.
- pionar 5y agoThat's not at all true.
- mikeyjk 5y agoA reference to the TV show Arrested Development :) Terrible legal advice given to a crooked businessman!
- deleted 5y ago[deleted]
- bin_bash 5y agoIn case you missed the reference: https://youtu.be/75iv3RKQUAM https://youtu.be/75iv3RKQUAM
- wpasc 5y agoI have the worst fucking attornies
- dragonwriter 5y agoYes they can. And there are lots of examples.
- mikestew 5y agoOh, sure, downvote a commenter because they didn't watch Arrested Development. c'mon, HN. :-P
- bhahn 5y agoJust speculation, but they may have children, and if so, prosecutors may have wanted to keep at least one parent out of jail.
- yarcob 5y agoIt would be nice if prosecutors really were that compassionate. I've read that lots of kids end up in foster care because their parents go to jail. But maybe that only happens to poor people. An alternative would be to have criminal parents serve time consecutively -- that way noone gets away, and the children would not have to be taken away.
- tech-historian 5y agoShe only committed some light treason.
- vmception 5y agoThey kicked back and relaxed, Emphasis on kickback. Basically they were able to cough up the $2mm the SEC wanted in the parallel civil suit, and didnt attempt to challenge the criminal case, so the prosecutors in the criminal case chose not to
- randyrand 5y agohttps://en.wikipedia.org/wiki/Women-are-wonderful_effect https://en.wikipedia.org/wiki/Women-are-wonderful_effect Women generally get less time for the same crime.
- nradov 5y agoThere's nothing illegal about trading your employer's stock if you don't have access to insider information. Millions of investors do that with no problems.
- refurb 5y agoPlenty of employers have company-wide blackouts for any stock trade in advance of earnings. So even if you don't have access to inside information you may be subject to company policies that prohibit it.
- unishark 5y agoYeah it's lame. Also they might prohibit shorting of the stock (always), preventing employees from locking in their stock option gains.
- sellyme 5y agoSomething being technically legal under some conditions doesn't automatically make it sound financial advice. There's a lot of companies out there. It's easy to pick one that definitely won't get you in to trouble instead of one that probably won't get you in to trouble.
- peeters 5y agoIf you work for a company that grants stock via shares or options, you're going to have to sell them at some point. At which point insider trading applies.
- wolfretcrap 5y agoIf simply being husband of a woman who works for Amazon can help you acquire such information on which you can perform insider trading. What stops from former workers at intelligence agencies from starting a hedge fund and employing all methods they learned while at work, to acquire such valuable information, trade based on that and offer others money management services?
- ForHackernews 5y agoThere are laws against corporate espionage. In terms of legal intelligence gathering, hedge funds already do that: https://newsroom.haas.berkeley.edu/how-hedge-funds-use-satellite-images-to-beat-wall-street-and-main-street/ https://newsroom.haas.berkeley.edu/how-hedge-funds-use-satel...
- staplers 5y agoI'd guess the same thing that stops Senators from trading on inside knowledge of global issues.. nothing
- sfifs 5y ago> What stops from former workers at intelligence agencies from starting a hedge fund and employing all methods they learned while at work, to acquire such valuable information, trade based on that and offer others money management services? That wouldn't be insider trading. Indeed hedge funds are known to use intelligence data like satellite photos etc. If they use illegal monitoring devices, hacking for info etc, they may fall afoul of federal espionage, wiretapping or CFFA, but it would still not be insider trading.
- rich_sasha 5y ago> if they use illegal monitoring devices, hacking for info etc, they may fall afoul of federal espionage, wiretapping or CFFA, but it would still not be insider trading. Thats an interesting point, if I hack the CEO’s phone and get the earnings number a day ahead, then trade off them, I kind of wonder how that isnt insider information. Although laws around that are so odd, especially in US, that it wouldn’t surprise me.
- TwoBit 5y agoHe blatantly traded those 11 times during blackout periods. Companies make it very clear what these blackout periods are, so this was very stupid, as he was bound to get caught.
- fy20 5y agoI wonder if he would have been caught if instead of buying Amazon directly, he bought an index fund that has them? I think Amazon makes up something like 3% of some of the Vanguard index funds.
- yarcob 5y agoI assume that the guy bought some type of short term options on Amazon to bet on rising/falling stock prices. I don't think buying an index fund, even with insider information, would allow for such massive profits.
- 0_____0 5y agoWould love to see the same penalties applied to members of congress who used info from private briefings at the start of the coronavirus pandemic to make stock trades. :|
- AviationAtom 5y agoThey get special treatment
- DevKoala 5y agoThis 100%. For example, Nancy Pelosi should be named the Wolf of Wall Street. Look at that amazing trade she made on cyber security companies right before the hacks on the government were announced. Source: https://housestockwatcher.com/summary_by_rep/Hon.%20Nancy%20Pelosi https://housestockwatcher.com/summary_by_rep/Hon.%20Nancy%20...
- alexatalktome 5y agoCan you name the companies and a source? I recall a few weeks ago there was a HN post about congressman but I didn’t recall seeing cyber security in the list.
- DevKoala 5y agohttps://housestockwatcher.com/summary_by_rep/Hon.%20Nancy%20Pelosi https://housestockwatcher.com/summary_by_rep/Hon.%20Nancy%20... Crowdstrike on September of 2020. I remember I went for it too, and it paid really well once the news the government had been hacked came out.
- camjohnson26 5y agoThey made a killing on Tesla calls for one, million dollar investment. https://newsthud.com/disclosure-fillings-reveal-pelosi-purchased-tesla-call-options-in-december/ https://newsthud.com/disclosure-fillings-reveal-pelosi-purch...
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- runawaybottle 5y agoHow do they prove this? A lot of people play earnings. Amazon is not an obscure stock. In fact, making an earnings play on Amazon is probably one of the more reasonable safer things to do compared to what the world is up to now days.
- ApolloRising 5y agoHard to guess right 11 times in a row.
- runawaybottle 5y agoBut here’s the thing, Amazon is the type of company that most likely beat earnings for an entire decade. It’s not hard to guess at all. Edit: blah, nevermind: https://techcrunch.com/2019/10/24/after-its-first-earnings-miss-in-two-years-amazon-shares-get-walloped-in-after-hours-trading/amp/ https://techcrunch.com/2019/10/24/after-its-first-earnings-m... I guess if he dodged those earnings plays, that would build a good case.
- ne0flex 5y agoI remember when I first started trading stocks, I bought Amazon after Christmas 2013 or 2014 in anticipation that their earnings would kill it due to Christmas. I think Amazon was at around $400 at the time. After the earnings report, they dropped about $320 so I freaked out, sold and never touched Amazon again. I still cry to this day.
- LanceH 5y agoHe needed Clinton's lawyer.
- brewdad 5y agoInstead of Martha Stewart's?
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- ALittleLight 5y agoGained 1.5 million. Lost 2.6 plus two years in prison and his wife's job. Not a great trade.
- lotsofpulp 5y agoCould have bought a few houses around town and made more money.
- lightgreen 5y agoGreat financial advice from a poor guy.
- lotsofpulp 5y agoThe point was they risked some much for so little. So little that in their case, price gains a few houses around them would have netted them more and not risk jail time.
- smnrchrds 5y agoIf you ignore all the ethical aspects of it and look at it as a purely economic transaction, whether it was a great trade or not depends on the odds of getting caught, not just the punishment if you get caught.
- ALittleLight 5y agoThat's true. I wonder what the odds of getting caught are. I wonder how the odds would change if you had someone unconnected to you who placed the trades and shared the profits. As I write this I can imagine a cryptocurrency marketplace for insider information. The insider asserts some fact about a company and stakes an amount in crypto. Buyers see the potential - e.g. "Amazon insider staking 1 million for X% return" and can choose to take on the deal or not. If the buyer does take on the deal they see the information and if the information is borne out then the buyer must return the insider's investment plus X%. Otherwise the buyer gets the insider's stake. There's a lot of rough edges and potential for abuse, but I can imagine something like this making it hard or impossible to prove insider trading.
- deleted 5y ago[deleted]
- spoonjim 5y agoInsider trade a million, you’ve got a problem. You have to insider trade a billion so that you’re untouchable. This is probably the hourly volume of insider trading at many hedge funds like SAC.
- pwillia7 5y agohey bro earnings gonna be good?
- deleted 5y ago[deleted]
- lightgreen 5y ago> You have to insider trade a billion so that you’re untouchable. Some source of that? I believe that is not true. Other shareholders don't really want managers to profit from insider trading.
- rasz 5y agoPrint $billions/month of fake electronic money and NYAG will negotiate with you for over a year to finally decide on a gift "penalty" of empty promise and a less than 12hours of your fake money printing volume. cough Tether cough.
- bronzeage 5y agoTether isn't insider trading. Tether is the biggest financial fraud in history.
- derivagral 5y agoAnecdotally, the "price" is closer to 50+ mil, not 1 bil. Hopefully that will change for the better in my lifetime.
- sumedh 5y agoSteve Cohen did not go to jail despite his firm pleasing guilty. https://en.wikipedia.org/wiki/Steve_Cohen_(businessman)#SEC_investigation_(2012%E2%80%932016) https://en.wikipedia.org/wiki/Steve_Cohen_(businessman)#SEC_...
- lucasyvas 5y agoDoes anyone honestly care about a million dollar trade by some employee's husband? The bar for insider trading is hilariously low - this seems like a total waste of time and resources when you could be chasing whales like you should be.
- tech-historian 5y agoIt's interesting to think about the incentives. Look at the press they're getting. It's at the top of HN and will be fodder on all major news outlets. It was probably an easy slam dunk case for the prosectors.
- brewdad 5y agoConsidering he did this 11 quarters in a row, this might be the most rim-shaking slam dunk in the history of slam dunks.
- catillac 5y agoAbout one person, probably not. I think this one hits close to home for a lot of us that have stock in many of these large companies from being employees. Granted, this situation seems particularly egregious, trading off of insider financial information not even available to most employees, but still. I believe the intent was to provide a chilling effect on regular people at FAMGAN-type companies who may have some access to insider information and were perhaps toying with the prospect of acting on it.
- sebmellen 5y agoI was sure the acronym was FAGMAN...
- crispyambulance 5y ago> ...this seems like a total waste of time and resources when you could be chasing whales like you should be. That's what the Bohra's thought! It's what a lot of insider trading criminals think. They think the SEC has "thresholds" and only go after "whales". They don't, they look for patterns and go for it. Low hanging fruit is irresistible for them, it's not a "waste of resources." What's ironic is the that typical insider trading criminals are well-compensated exec level staff. These people pull in Nx100K total comp. The thing is, at those level their peers have wildly variable net-worth. Some come from dynastic wealth, others clawed their way up from ordinary backgrounds. Tragically the ones who clawed their way up tend to suffer from envy when they look at the toys some of their old-money peers have-- they end up looking for "shortcuts" to keep up with the Joneses. Envy can lead to ugly things.
- agotterer 5y agoHow does this even end up on the SEC or IRS radar? $1.4M seems like a blip in the grand scheme of things.
- catillac 5y agoI don’t know about IRS but SEC enforcement actions are largely driven by complaints from regular people. Perhaps the stock broker got suspicious and acted per their ethical duties, or perhaps one of them wasn’t as tight lipped as they would have needed to be.
- dboreham 5y agoPerhaps the husband and wife are not getting along so well now and one of them snitched on the other?
- travisjungroth 5y agoThe initial insider trading analysis is automated. Dude traded in front of 11 straight earnings calls. That’s gonna get you put on a list.
- Mauricebranagh 5y agoOr maybe someone at amazon tipped the SEC off
- ping_pong 5y agoSEC targets regular people to keep us in line. They let big institutional traders and connected people go.
- refurb 5y agoI have no doubt the SEC has a bunch of rules they use to flag suspicious transactions. The data analysis spits out a few names and they follow up in person to see who lawyers up and who cracks under pressure. It's also why Matt Levine's "rules of insider trading" includes "Don’t do it by buying short-dated out-of-the-money call options on merger targets". Certain transactions are suspicious as hell, especially when they can look at your trading history and determine you've never really traded much and just opened the account 2 days prior and made a $100,000 bet on the trade. Or for the really clever people, they find out although you made a suspicious trade you don't work for Amazon, but LinkedIn says you're the wife of someone who works in finance there. Oops! Though I wonder if that rule needs to be updated with r/WSB doing these trades all the time. https://www.bloomberg.com/opinion/articles/2018-08-12/the-10-laws-of-insider-trading https://www.bloomberg.com/opinion/articles/2018-08-12/the-10...
- ping_pong 5y agoI love how no one on Wall Street was convicted of anything criminal even though they almost destroyed the entire global financial system. There was even text messages of fraud being committed and nothing happened. Not even clawbacks or fines or anything. The government just let them go. That was so disappointing, and one of the first signs of how Obama was going to betray the progressives and let Bush's status quo remain. It was pretty sickening to watch the entire thing play out and then end with nothing.
- nverno 5y agoWell not nothing, we got a nice lesson on how the world works :D
- deleted 5y ago[deleted]
- chrisjharris 5y agoI don't disagree with the general sentiment that the GFC was a total disaster, and I'd certainly not argue against the idea that a system had developed that had poor incentives, with sometimes greedy and unethical people working in it. What kind of concerns me, though, is the way that poor decision-making is conflated with breaking the law, or the belief that a terrible outcome ex-post necessarily implies illegality. I don't really see this logic being applied in other walks of life - in most jobs, if you are incompetent, or even incompetent and amoral, you wouldn't expect to be prosecuted. For the most part I'd not see the GFC as a morality tale but rather a kind of weird emergent phenomena whereby one area of the economy became so big and complex that it was beyond's anyone's ability to manage, and the interactions of the millions of bit players in it - all of whom in their own way wanted to succeed and do well for themselves - led to this collectively disastrous outcome. Which isn't to say that nothing illegal occurred - I'm not sure how you'd draw a boundary around the GFC but there were a number of securities fraud prosecutions in the years afterwards - but I think if you take the GFC and subtract all illegal behaviour, you'd still have the GFC.
- deleted 5y ago[deleted]
- sjreese 5y agoIn this case, it was a planned crime, with profits ship to Seychelles(no aml) and then on to India. Had a fine been possible, no jail time. This type of corruption is never single sourced - the information transfer for all value types, are done where schema and data(databases in total) -- leaving US national security for sale eg "sunburst" and public data in the hands of ( car warranties stalkers ) In sum, all Amazon data has is in the hands of India criminal networks having for travel, fake ids and blackmail .. leaving American youth unqualified for jobs in their country.. its hard to compete against fake credentials and coordinated action ( the results are obvious )
- leephillips 5y agoStories like this boggle my mind. How do such people think that they are going to get away with this? If I were going to try something like this I would at least make some attempt to obfuscate my activities; trading through proxies, mixing in losing trades, something.
- JumpCrisscross 5y ago> How do such people think that they are going to get away with this? Many Americans think insider trading is l common than. If everyone is getting away with 70 mph, you can too. (Exhibit A: this thread.) In reality, insider trading enforcement is effective. The SEC looks for unusually profitable trades ex post facto. Their verification is easier than the insider trading. Wall Street doesn’t insider trade because it’s stupid and there are lower-hanging fruit.
- seanmcdirmid 5y agoWere they even American? I've heard more than a few stories of immigrants coming the states, working tech jobs, and ... getting thrown in jail for insider trading because their stock market worked very very very differently back home. It has gotten so bad that many of the big techs include mandatory training on what inside trading is and how not to do it.
- benrbray 5y agoI think that mandatory training is useful for everyone, not just immigrants. It's not like American high schools / colleges are teaching about finance.
- seanmcdirmid 5y agoSure, but with the right context those videos feel very cringey (who would ever do that???).
- tarsinge 5y agoHard to believe when I see https://en.m.wikipedia.org/wiki/2020_congressional_insider_trading_scandal https://en.m.wikipedia.org/wiki/2020_congressional_insider_t...
- 10x-dev 5y agoHaving worked at Amazon, I know the employees are fully aware of blackout periods. There is no way to claim plausible deniability there. It is easier for clueless household members to get a hold of the earnings statement or unknowingly trade AMZN during blackout periods, so in some cases I can see how an honest mistake could happen. However, this guy traded 1.5M 11 times during blackout periods ahead of earning statements. There is just no way to claim ignorance there. He had to have known that it's illegal. I can't even begin to imagine the hubris or the stupidity. If they put Martha Stewart in prison for insider trading, they'll obviously put the husband of an Amazon employee without blinking. What was he thinking?
- geoduck14 5y agoMartha Stewart went to prison for LYING about insider trading.
- Thorrez 5y agoAnd even outside the blackout period, if you have material information that isn't publicly known and came from an inside source, it's illegal to trade.
- lordnacho 5y agoI think people simply don't appreciate that it's an easily caught crime. Most illegal things that one might do won't ever be caught, eg you break into someone's house and it would take the police to bother investigating and then put enough effort into that one case. Or to stay in white collar you might forget to report some income, how's the tax man to know unless you are already in focus? With insider trading the investigation is a DB query. It costs very little to look at all the trades for everyone around announcements and see who was acting suspiciously.
- TwoBit 5y agoAnd it's probably all automated.
- infinite8s 5y ago
- camjohnson26 5y agoWhat a waste of time and resources. You could argue this behavior helps information leak into the market.
- antonzabirko 5y agoThis man sent to jail. How many politicians were sent to jail for covid insider trading? What about the billions Jeff Bezos fleeced in taxes? It's the rich man's world, where justice is only onto the poor.
- yunohn 5y agoThe sad part is the stark difference in comments here and on that article [1]. People were skeptical that politicians could commit insider trading, but this couple of course deserves to be jailed… [1] https://news.ycombinator.com/item?id=27406243 https://news.ycombinator.com/item?id=27406243
- lightgreen 5y ago> How many politicians were sent to jail for covid insider trading? What is covid insider trading? > What about the billions Jeff Bezos fleeced in taxes? I believe Jeff Bezos did no violate the law, but that's really offtopic here. > It's the rich man's world, where justice is only onto the poor. Tell that to all the rich guys went to jail. Or if you have some statistical evidence, I'd love to read it.
- antonzabirko 5y agoJeff leverages trillions in infrastructure, the maintenance of which costs billions. Taxpayers subsidize that. You aru not being genuine with your words, but this I will clear up.
- lightgreen 5y agoThat's what countries and governments are for: people and companies pay taxes so other people and taxes count use the infrastructure. Amazon pays quite a lot of taxes, directly and indirectly. It creates jobs, improves infrastructure etc. Anyway, that's offtopic: whether Jess should be in jail because he violated the law and whether someone should pay more taxes are completely different topics.
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- aaomidi 5y agoRules for thee but not me
- havocsupreme 5y agoI'll be honest, the title of the announcement made by the justice department looks like a news article title written by journalists and not by a government office. I have nothing against journalists or attorneys, the subject just doesn't look right.
- tomcam 5y agoIf he were smart he’d just run for Congress, where insider trading is allowed.
- 88840-8855 5y agoI am wondering if there could be a way to outsmart the system. Perhaps trades are monitored automatically and once flagged for suspicious timing and returns, they are reviewed manually. What if someone was trading in a smart way, e.g. purpusfully accepting losses on the same stock/derivate, trading during non-blackout periods, focusing on more than one stock excessively. This could reduce the risk for automatic detection. And finally, when you are reviewed manually, you should be able to present some fancy excel models that you pull out your ass to support your "buying decisions" when you made the insider trading moves. The biggest thing would be, however, to keep your partner in crime at distance so there is not obvious evidence that you spoke about trading. I wonder how hard it is to outsmart the system and I can imagine that there are many people out there who play it very well.
- hnarayanan 5y agoObviously this.
- zfxfr 5y agoI am French. I have never been to America. From my point of view, so the view of an European who only know USA through the eyes of various medias. I am under the impression that justice sentences are very harsh there ! It looks like anybody can be sent to prison for pretty much nothing. Wow ! 26 months ! In France he would have been sentenced to 4 or 5 SUSPENDED months. My parents and some of their friends plans to go to USA for tourism I hope they don't get arrested (pulled over). My dad speaks English "like a Spanish cow" and his attempt at making jokes might not please the officers.
- techie128 5y agoDon't worry, if ya'll are white they'll be fine.
- CyberRabbi 5y agoWell as long as they don’t break the law they’ll be fine. That’s a much stronger signal when it comes to predicting who will face criminal charges.
- Mauricebranagh 5y agoDepends did Papa go to ENA with the right people. Why do you think that serious white collar crime shouldn't involve jail time.
- bagacrap 5y agominimum security and he'll get out early for good behavior. Curious though, do you think a slap on the wrist would be better in this case? Would you also recommend a non-sentence if he broke into homes to steal $1.5M?
- mikestew 5y agoRight, because financial fraud measured with 7 digits is exactly the same as being pulled over and talking to a police officer in broken English. (That's sarcasm, in case it doesn't translate well.) I'd argue if all an offender gets for a million dollar crime is a suspended sentence, maybe France needs to get a grip on their white collar crime problem. Regardless, if all I knew about France was what I saw on "various medias", my view of your country would be just as skewed as your view of mine. It reminds me of an immigrant I worked with in the 80s who spoke of how his relatives and friends back home wanted to know if the U. S. was just like the television show "Dallas". Not in Indianapolis, Indiana, it wasn't. Nor even Dallas, Texas itself, I imagine.
- throwaway879 5y agoAnd members of Congress trading on insider news (before bailout packages etc) get away with it?
- jrootabega 5y agoIs that illegal? Yes. The 2012 STOCK Act prohibits it.
- fasteo 5y ago"Rather, Bohra engaged in illegal insider trading in advance of 11 straight earnings announcements" If he made 11 consecutive trades, he didn't need any insider info, or am I mising something here ?