3 ms·

How were they caught then?

paulpauper 5y ago
insider trading does not imply making money. just trading on insider info.
mason55 5y ago
The SEC will send a list to your compliance dept if they see weird trades (e.g. short-dated out-of-the-money calls) and ask if anyone on the list works there. The compliance dept also has a list of people with material non-public info and they get the list of people who made weird trades with the question “do you know any of these people?” If you know one and you didn’t provide them info then you say so because the implied threat is they’ll find out either way that you know one of them.
- 1-more 5y ago
  And the wild thing is that lying to a federal investigator is a crime in and of itself! So don't say you don't know the person they ask about. 18 U.S. Code § 1001 - Statements or entries generally https://www.law.cornell.edu/uscode/text/18/1001 https://www.law.cornell.edu/uscode/text/18/1001
  - IncRnd 5y ago
    That's not exactly true, but to use a turn of phrase - close enough for government business! [1] The lie is a felony but only when connected to a federal matter. [2] [3] [4] [1] This used to mean (many moons ago) something of very high quality. However, as our government became ever more like what is _now_ our government, the idiom took on the opposite meaning: good enough to say it's done, so we can move on from it. It's also used to say when something is correct for the discussion but not in the broader sense. Source? My neighbor the FBI agent told me, and I've heard it in action many times since then. [2] https://www.pagepate.com/experience/criminal-defense/federal-crimes/false-statement-charges/ https://www.pagepate.com/experience/criminal-defense/federal... [3] https://www.justice.gov/archives/jm/criminal-resource-manual-916-false-statements-federal-investigator https://www.justice.gov/archives/jm/criminal-resource-manual... [4] https://www.mololamken.com/knowledge-Is-It-a-Crime-To-Lie-to-the-Government-Even-If-You-Are-Not-Under-Oath https://www.mololamken.com/knowledge-Is-It-a-Crime-To-Lie-to...
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  - bsder 5y ago
    Rule the first: Don't talk to the police. The SEC and the IRS are police. Obligatory repost: https://www.youtube.com/watch?v=d-7o9xYp7eE&t=612s https://www.youtube.com/watch?v=d-7o9xYp7eE&t=612s
dkrich 5y ago
Because they made over $3 million probably having done little to no trading prior to that run. Pretty much anyone could spot insider trading patterns. I’d be willing to bet these guys were making bets only on Netflix in the form of short-dated options most of which typically expire worthless. If someone were to repeatedly aggressively buy low probability short-dated options around an event like earnings and win consistently you would be able to infer that they are trading on insider knowledge. Of course recognizing the pattern is only half the battle. They also have to figure out how they are accessing the inside info, hence tracing the traders back to Netflix employees and conversations they had regarding paybacks, etc.

insider trading does not imply making money. just trading on insider info.

The SEC will send a list to your compliance dept if they see weird trades (e.g. short-dated out-of-the-money calls) and ask if anyone on the list works there. The compliance dept also has a list of people with material non-public info and they get the list of people who made weird trades with the question “do you know any of these people?” If you know one and you didn’t provide them info then you say so because the implied threat is they’ll find out either way that you know one of them.

1-more 5y ago
And the wild thing is that lying to a federal investigator is a crime in and of itself! So don't say you don't know the person they ask about. 18 U.S. Code § 1001 - Statements or entries generally https://www.law.cornell.edu/uscode/text/18/1001 https://www.law.cornell.edu/uscode/text/18/1001
- IncRnd 5y ago
  That's not exactly true, but to use a turn of phrase - close enough for government business! [1] The lie is a felony but only when connected to a federal matter. [2] [3] [4] [1] This used to mean (many moons ago) something of very high quality. However, as our government became ever more like what is _now_ our government, the idiom took on the opposite meaning: good enough to say it's done, so we can move on from it. It's also used to say when something is correct for the discussion but not in the broader sense. Source? My neighbor the FBI agent told me, and I've heard it in action many times since then. [2] https://www.pagepate.com/experience/criminal-defense/federal-crimes/false-statement-charges/ https://www.pagepate.com/experience/criminal-defense/federal... [3] https://www.justice.gov/archives/jm/criminal-resource-manual-916-false-statements-federal-investigator https://www.justice.gov/archives/jm/criminal-resource-manual... [4] https://www.mololamken.com/knowledge-Is-It-a-Crime-To-Lie-to-the-Government-Even-If-You-Are-Not-Under-Oath https://www.mololamken.com/knowledge-Is-It-a-Crime-To-Lie-to...
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- bsder 5y ago
  Rule the first: Don't talk to the police. The SEC and the IRS are police. Obligatory repost: https://www.youtube.com/watch?v=d-7o9xYp7eE&t=612s https://www.youtube.com/watch?v=d-7o9xYp7eE&t=612s

dkrich 5y ago

Because they made over $3 million probably having done little to no trading prior to that run. Pretty much anyone could spot insider trading patterns. I’d be willing to bet these guys were making bets only on Netflix in the form of short-dated options most of which typically expire worthless. If someone were to repeatedly aggressively buy low probability short-dated options around an event like earnings and win consistently you would be able to infer that they are trading on insider knowledge. Of course recognizing the pattern is only half the battle. They also have to figure out how they are accessing the inside info, hence tracing the traders back to Netflix employees and conversations they had regarding paybacks, etc.