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Insider trading by executives is pervasive – research

ojbyrne 5y ago
This feels like an extended ad for tipranks.com
ldjkfkdsjnv 5y ago
Nancy pelosi's trading returns beat every well known investor, she is running far lower amounts of capital, but shes averaging 70% a year. Meanwhile, the rest of us slave away at our jobs like cattle, and listen to her speak on TV about "fighting for our rights, justice, equality"
- paulgb 5y ago
  Does that 70% figure come from someone modeling out her portfolio based on the filings? I'd love to see it if it's public. Just as a gut reflex that seems high even with someone who had the amount of inside info she has, but not saying it's impossible.
- lisper 5y ago
  This sort of claim really requires a reference.
  - smoyer 5y ago
    This one is most memorable to me: https://thehill.com/homenews/senate/488593-four-senators-sold-stocks-before-coronavirus-threat-crashed-market https://thehill.com/homenews/senate/488593-four-senators-sol... Not only is it insider trading, it's clear that the briefing indicated the amount of suffering that was coming to their constituents.
    - xyzzyz 5y ago
      Your reference does not even mention Pelosi. It does not allege “insider trading” either, but rather suggests breach of STOCK Act. This is not the same thing as insider trading, which is about breaching fiduciary duty to shareholders.
      - smoyer 5y ago
        Feinstein, Pelosi ... apparently I can't tell the difference (funny how my mind specifically recalled this article). Sorry about that!
      - fourstar 5y ago
        Imagine shilling so hard for politicians like this.
    - aaomidi 5y ago
      https://twitter.com/nancytracker?s=21 https://twitter.com/nancytracker?s=21 theres even a Twitter tracking her shit now.
  - fourstar 5y ago
    Oh no! Not my heckin’ politicianerinos doing something unethical and illegal!!
- orwin 5y ago
  So i researched your claim, i found a twitter thread and a Greenwald post supporting you, but with no data (i did not find the 70% returns/year averages) and then i found this[0] that explain how well her husband ran during the pandemic (TBF he ran as well as i did, 40% returns, better than when i was playing online poker, with a lot less time invested). In any case, this is distasteful and gross. Every bill should have an estimated impact on publicly traded companies, and politicians with stocks should be forbidden to discuss/mediate the bill, and only vote on it. [1]" https://www.forbes.com/sites/forbes-personal-shopper/2021/10/01/flexispot-comhar-adjustable-standing-desk-review-on-sale/?sh=1959522d294a https://www.forbes.com/sites/forbes-personal-shopper/2021/10...
  - solveit 5y ago
    > Every bill should have an estimated impact on publicly traded companies I don't think this is feasible. > and politicians with stocks should be forbidden to discuss/mediate the bill, and only vote on it. But I'll go one further on this. No person holding public office above a certain level should be allowed to trade individual stocks. Either buy broad-market indices or have a third-party invest for you without your knowledge on specifics.
    - IAmGraydon 5y ago
      Policy can move broad market ETFs just as much as individual stocks.
      - raziel2701 5y ago
        It's the type of imperfect solution we need. Currently Senator Manchin is holding up the infrastructure bill because its plans to combat the climate crisis will impact his million-dollar investments in the coal and energy industries [1]. These people should not be allowed to hold any kind of private or public stock other than ETFs of the S&P 500 index. This way you remove the conflict of interest in favoring one sector/company over another and instead if they want to make money through the market they can do so by helping the overall economy instead. [1] https://www.businessinsider.com/senator-joe-manchin-half-million-year-coal-stocks-climate-crisis-2021-9 https://www.businessinsider.com/senator-joe-manchin-half-mil...
- jahewson 5y ago
  70% does not come close to beating every well known investor, including her investor husband. She had a good year. When that happens 100-200% returns are not unheard of. Once you annualise the numbers it becomes far more pedestrian.
- matheusmoreira 5y ago
  > Meanwhile, the rest of us slave away at our jobs like cattle Dehumanizing, isn't it? Working hard to contribute to society while these people accumulate 10, 100, 1000 times our yearly salaries in seconds by playing some market. The world we live in is so absurd, it's such a joke.
  - iratewizard 5y ago
    The fairness that we have is a gift given to us by the winners of unfair power struggles. Things can always be more fair, sure. But it's hard to ignore losing when you're winning all the time.
  - booleandilemma 5y ago
    Aren’t all/most of the congresspeople millionaires? We’re ruled over by the rich.
    - coryrc 5y ago
      They're mostly really old. At this point, retiring a millionaire or near-to-it is required to live a middle-class lifestyle.
    - SyzygistSix 5y ago
      We vote them into office. Or at least the small minority who bother to vote in the primaries do.Candidates that are closer to working class tend to lose in the primary elections despite the amount of information online and how easy it is to access compared to the past.
  - jkhdigital 5y ago
    Is there some other world that would be less joke-like? I mean one that has actually existed, not a utopian fantasy.
- varelse 5y ago
  It would be nice if Nancy Pelosi were not the classic strawman here. I don't excuse her behavior either but it's totally legal for now and there are so much worse out there. Yet they never come up it's always Nancy Pelosi and that's just creatively bankrupt. So here are 36 more... https://www.businessinsider.com/congress-stock-act-violations-senate-house-trading-2021-9 https://www.businessinsider.com/congress-stock-act-violation...
  - bitexploder 5y ago
    It’s actually not legal. See: the STOCK act. It’s just not enforced.
    - lastofthemojito 5y ago
      "Not enforced" and "legal" are close enough to be considered synonyms in everyday speech. You often hear people say that marijuana is legal in Amsterdam. It is in fact illegal, but it exists in a funny grey area where it is tolerated and police don't enforce laws against recreational marijuana use. Enough that there's an entire "coffeeshop" culture that's sprung up there around marijuana use. So yeah, hearing "there's a law against this but there's no enforcement of that law"...most people shrug and say, "ok, that's legal".
      - ipaddr 5y ago
        It is decriminalized for personal use. Not exactly the same as not enforced. Not enforced means a cop could decide to enforce this on you for leverage or personal reasons.
      - chrismcb 5y ago
        No one, in their right mind would confuse "legal"and "not enforced." Most people understand the difference and would not use the synonymously. For one thing, a lot of people with principals would not do something that was illegal, even if it wasn't enforced (at least not knowingly)
    - fourstar 5y ago
- paganel 5y ago
  > but shes averaging 70% a year. Is there a way to "index-fund" Pelosi's investments? More generally, "index-funding" the investments made by politicians who are in a position of power would be a really interesting thing.
  - fny 5y ago
    A lot of this gain has to do with leverage. Her husband loves to buy stock options which juice up typical returns significantly. Not saying there's no insider information, just that the returns are heavily amplified either way.
- burnished 5y ago
  Isn't it her husband who does her investing, and that is his trade? The claim is less remarkable with this in mind.
  - omginternets 5y ago
    Is it? You don’t think pillow talk factors into this?
    - burnished 5y ago
      Factors? Sure. But I don't think its the big scandal everyone tries to make it out as. Which you can kind of tell because the story never includes any of the pertinent facts, its just boiled down to the most sensational version.
- IAmGraydon 5y ago
  I did 400% in 2020 and over 500% in 2021. No insider trading here. It is possible.
  - smallhands 5y ago
    please can we talk ? spikezleedotgmail.com
- RickJWagner 5y ago
  Bah, she's a piker. Hillary Clinton made hundreds of thousands on 'cattle deals', with no knowledge of the workspace and quick turnarounds. But they're not even close to Hunter Biden's league.
- zz865 5y ago
  > shes averaging 70% a year. Source? Sounds like someone just made it up. This page said they went from 41 to 115 in 14 years, which is more like 12% a year. https://www.opensecrets.org/news/2020/04/majority-of-lawmakers-millionaires/ https://www.opensecrets.org/news/2020/04/majority-of-lawmake...
- deleted 5y ago
  [deleted]
- fourstar 5y ago
  Maybe it’s time said “cattle” wake up? All politicians are actors acting in their own self-interest.
- SavantIdiot 5y ago
  I hate that she's a hypocrite. But there are so many better people then her in the party (e.g., Wyden & AOC), and it's not like I'm going to run and join the dumpster fire known as the QOP. I mean, what is the QOP really doing to help? Nada, they've just made it 12 trillion times worse from 2000-2008 and 2016-2020 (Ignoring the 80's entirely). At least the dems are helping the middle class every day even if some are stealing while doing it. Better than just a cross-shaped boot in the face while stealing.
- NicoJuicy 5y ago
  Her husband was already a successful investor before Nancy went into politics. And because of their wealth, she could dedicate worked for the party for free for 20 years. Which got her to where she is now. I would be more concerned with presidents who are known to spread/say things to try to influence the market.
- sumedh 5y ago
  Dont forget Chris Collins was caught for giving insider tips to his son and others and was going to jail for that when Trump pardoned him.
AlbertCory 5y ago
> "In two decades the SEC hasn’t brought a single insider trading case involving trades made under a 10b5-1 plan." Ladies and gentlemen of the jury: the defendant changed his 10b5-1 plan multiple times, and one of those times he profited hugely from it. The defendant's excuse that his advisor told him to do it and he needed the money for his daughter's college is just unpersuasive. Anyone see why a prosecutor might be reluctant to bring such a case? It might well be true, but the jury may or may not stay awake long enough to agree. Best to concentrate scarce resources on cases you CAN win. Note that I'm not saying insider trading is harmless; just that it's like illegal drugs: no policies will stamp it out entirely.
- smolder 5y ago
  "No policies we have tried or are collectively willing to try will stamp it out" is the accurate version of your ending statement, whether talking about drugs or insider trading. It's unreasonable to rule out every policy as only an infinitesimal portion have been explored. How best to organize humanity might be the least solvable and most open ended problem conceivable, one worthy of a multiverse scale simulation. We can't make solid predictions about what inputs lead to what outcomes. Species-wide conclusions about the impossibility of ending some specific immoral behavior depend on an expectation of irrationality from people, that they're unable to abandon the status quo.
  - satellites 5y ago
    Additionally, what is “immoral” is relative. I think an individual choosing to consume illegal drugs is perfectly moral, but lots of people disagree about that.
imgabe 5y ago
I'm more than willing to believe there's insider trading, but the data presented at the beginning is not convincing. > Of the 496 trades [Filler has] made since 2014 in Alabama’s ServisFirst Bancshares Inc., where he sits on the board of directors, and Century Bancorp Inc. of Massachusetts, where he’s the largest shareholder, 372 of them, or 75%, have shown a profit three months later. > Besides Filler, other TipRanks stars include Steve Mihaylo, the CEO of telephone services company Crexendo Inc., where he owns a $60 million stake. Mihaylo has turned a three-month profit on 83% of his trades over the past five years even as Crexendo’s shares have seesawed. We've also had an unprecedented bull market over the past 10 years. If you pick any random stock at any time and hold it for three months, what are the odds that it will be worth more? The article compares the returns to the S&P500, but that is the net performance of those 500 stocks. You'd have to compare it to the base rate of picking a random stock to see if it's actually remarkable. Maybe the S&P 500 performed lower because 75% of the stocks in it went up and 25% went down. But that means that if you randomly pick one stock, you'd have a 75% chance of it being one of the ones that went up, and you'd outperform the S&P500. (Well, not quite, maybe it could go up, but not as much as the S&P500 as a whole. But still, most of the stocks that go up, would have to go up more than the average of the whole index in order to compensate for the ones that go down) Later in the article, when they mention that insiders tend to reliably sell stock ahead of bad news, that seems much more damning.
- Retric 5y ago
  Individual stocks are surprisingly random across three month stretches even in bull markets. 75% is significantly outperforming in terms of random individual stock picks over the last 10 years. The real issue is people wouldn’t bring it up if the number wasn’t “shocking”. Which self selects for outliers.
  - zeptonix 5y ago
    Right, stocks [which are just proxies for companies] are completely random because of <random bs paper from E. Fama from 51 years ago>. Because, of course, how would it ever be possible to predict how a company might perform? That must surely be impossible, because TradFi economics has decided it must be. And then people just continually parrot the same stuff they've heard and it becomes more and more accepted as fact. I just hate hearing these same narratives being repeated because... they've already been repeated. Why must stock returns be random? It's predicting whether a company is going to do well or not, which has nothing to do with randomness. And yet people (like this commenter) just keep repeating this stuff, absolutely endlessly. They don't even know why they're doing it (try asking him) -- they just keep doing it.
88j88 5y ago
OBVIOUSLY
deleted 5y ago
[deleted]
c7DJTLrn 5y ago
The idea that some people will not use their knowledge to game the system is absurd. I know there's ways of tracking down people via trading patterns but what's to stop an insider selling information to someone completely untied to them and profiting that way? As long as it isn't made obvious by the trader, that would be an untraceable form of insider trading. Maybe we should just demand all information be open.
- xpe 5y ago
  > Maybe we should just demand all information be open. This is both theoretically and practically impossible.
- xpe 5y ago
  > I know there's ways of tracking down people via trading patterns but what's to stop an insider selling information to someone completely untied to them and profiting that way? Many things: Records of communications. People talk.
- notyourwork 5y ago
  It’s possible to commit a crime but it’s also possible to get caught. Not sure what grounds your argument stands on.
etaioinshrdlu 5y ago
Imagine an alternate reality where all stock holding info is public, with names attached, (Everyone's! Including yours!). There are also no insider trading rules. Such a system seems possibly fairer and more efficient than what we have now.
- tacostakohashi 5y ago
  That reality sounds pretty similar to what we have. Pretty much everything of consequence is on a 13-D, 13-F, 13-G , etc.
  - chii 5y ago
    the reporting time might be too long for it to matter. What is needed is instantaneous reporting.
- jcpham2 5y ago
  Do you mean something like a distributed, immutable, permissionless database that everyone can query?
  - satellites 5y ago
    Or a well-audited public ledger overseen by democratic institutions. Bonus if it doesn’t consume the electricity of an average nation to operate.
    - jkhdigital 5y ago
      > well-audited public ledger overseen by democratic institutions Yes, because democratic institutions have such a great track record of managing things like this
      - satellites 5y ago
        As opposed to what? The wonderfully secure blockchain-based alternatives where redress for fraud and theft is still handled by… those stodgy old institutions?
toss1 5y ago
Considering that they have been going at the problem for more than half a century, and if anything, making negative progress, perhaps there is a better approach. How about: make all trades 100% transparent in real time, and nevermind the insider trading laws? If Jack Smith, the CFO of XYZ Corp, sells 300 shares at 11:04:00 AM, you can know about it by 11:04:01. Sure, Jack still has an advantage, but now his trade is ACTUALLY providing information to the market. It is one thing for TipRanks to provide analysis two days after, another thing for them to be able to do it in almost real-time, or setup a Fast Follower fund... Seems there's only good to be gained here, and the insiders won't have to worry about prosecution.
paulpauper 5y ago
Cheating at a game does not mean the game itself is rigged.
- aynyc 5y ago
  If the game allows cheating for certain group of players, then the game is rigged.
  - WhisperingShiba 5y ago
    Maybe broken instead of rigged? Or as a collective, we don't know the game theoretic best move to get out. It all comes down to education at the end of the day, that's why we use hackernews.
    - deleted 5y ago
      [deleted]
motohagiography 5y ago
It's not rigged. If you think the stock market is rigged, you'd have to apply similar lens to the factors that influence it like inflation stats, employment numbers, gold and other metals prices, interest rates, and currently, home prices, food and fuel prices, and all the other scientifically collected data that supports policy. Markets are the sum of the information everyone has about prices (even if that's not evenly distributed), and if you could co-ordinate to rig that, you could rig literally anything. If it were even possible to rig any, let alone all, of those things, the whole thing would be as fragile as the narrative that held it together. It couldn't exist. We'd only ever be one viral tweet away from total civilizational meltdown. I get that connected insiders need more scrutiny and maybe making some high profile examples would set the tone, but that some bad actors don't bring the whole thing down is more of a feature than a bug in this case.
- wtallis 5y ago
  > Markets are the sum of the information everyone has about prices (even if that's not evenly distributed), and if you could co-ordinate to rig that, you could rig literally anything. The market being rigged (in the casual sense used here) does not require anyone to be manipulating all of the factors that affect prices; you just need to be able to cheat on some input to the system. Trading on non-public information may not always be a successful strategy because you might get unlucky and some other factors could unpredictably outweigh the impact of the insider information you're basing your trades on—but on average, insider trading works until/unless you are caught and prosecuted.
- xpe 5y ago
  > Markets are the sum of the information everyone has ... This leaves out some key facts: different people have access to information at different times. It isn't fair (and it isn't good for market efficiency) for insiders to act on their inside information. This isn't disputed.
  - sokoloff 5y ago
    I agree insider trading isn’t fair. It’s much less clear to me that insider trading harms market efficiency. I think we accept the increased inefficiency (from barring insider trading) in the name of fairness and resulting trust in the market.
throwaway81523 5y ago
Both people involved are now deceased, and while I heard this story from one of the principals, I have my doubts. But fwiw: I knew a guy who was close buddies with the outside accountant for a Fortune 500 company. One of the accountant's duties was to file a quarterly document with the SEC with the company's financial results. That was before this was done online. The contents of the document, before filing, were very confidential and using or disclosing them would have been illegal inside trading. However, as the story goes, the instant the document was in the SEC's possession, its contents were considered public and people with the info were allowed to use it (maybe not the accountant himself because of some special rules). And so, according to how I was told, the accountant, after dropping off the document and walking out of the SEC building, would pull out his cell phone and call his buddy from the front steps with the relevant info. The buddy would then make trades on the now-"public" info that no one else yet knew, because it was still on a piece of paper in the SEC office that no one had yet looked at. Could it really have been that easy? This would have been the 1980s or so, I think. I think they had cell phones then, but if not, they had pay phones.
- leoc 5y ago
  The original handheld "brick" phone, the https://en.wikipedia.org/wiki/Motorola_DynaTAC https://en.wikipedia.org/wiki/Motorola_DynaTAC , came out in 1984. This was the beginning of the period when cellular phones were seen as expensive status symbols and specialist equipment. (In fact the phones were often still carphones and transportables https://www.mobilephonehistory.co.uk/arcticles/80s_brick_phones.php https://www.mobilephonehistory.co.uk/arcticles/80s_brick_pho... .) Then in the early '90s, about the time that GSM digital service came in, prices began to drop sharply and wide adoption began. (One sign of the change which got some attention at the time was that the SWP https://en.wikipedia.org/wiki/Socialist_Workers_Party_(UK) https://en.wikipedia.org/wiki/Socialist_Workers_Party_(UK) , a somewhat ersatz radical-left UK fringe party, was seen using mobile phones to organise its then very successful steet demos.)
- siruncledrew 5y ago
  It probably happens even more now than in the 1980s. The speed of communication outpaces the speed of government bureaucracy so it’s easy to take advantage of a technicality to make huge profits. It’s like university exams when a friend in a morning class would take an exam and then tell others in the afternoon class about the questions and what to expect before taking the exam. The no guarantee the exams would be the say, but even if some questions overlap it makes a big difference. In the case of university, I’m pretty sure this would be some kind of honor policy violation with repercussions if found out, and for Wall St it’s probably not even as tough as uni.
darig 5y ago
Is there ANY chance it isn't rigged? That's the real question.
darksaints 5y ago
If you think insider trading is bad, wait til you see what the Federal Reserve board gets to do, all completely legally, in currency markets. They write their own paychecks out of thin air.
- cced 5y ago
  What does the Federal Reserve board get to do?
  - darksaints 5y ago
    Reliably determine the direction of a $6T/day market, trade in it with no laws on insider trading or public disclosure requirements, and do it all with exemptions on leverage restrictions.
theshadowknows 5y ago
There was an Addams family episode way back where Gomez was depressed because everything he did would win big. So he decided to dump all of his shares of some stock that he knew was going to go up. And when news spread that he’d done it the stock tanked and he ended up “winning” because he saved so much money by selling before the huge dip. I’ve always thought that was interesting.
- stonecharioteer 5y ago
  I remember that episode! It was about him being bad at losing. He lost at losing lol.
numair 5y ago
Remember, you can trade stocks without trading stocks. What do I mean? Mark Cuban sold a collar on his Yahoo stock through Goldman for $[I forget] billion dollars. That was an off-market trade in which someone bought his entire block off of him. In today’s world, with tons of low interest (as in, single/double-digit basis points) loans and other fun weird contraptions, you have a lot more options to trade without trading. I have no grand reveal here, but there’s probably an entire “dark dataset” regarding that activity that is missing from this conversation.
- gitfan86 5y ago
  Also a lot of shorts exist because if you are long X $1 and short Y $1 your total investment is $0.
  - Kranar 5y ago
    This is false, if you're long one security and short another, your total cost basis is the sum of the absolute value.
  - test6554 5y ago
    How is that not apples and oranges. You buy one orange and eat one apple and thus everything is in its original state?
SavantIdiot 5y ago
How can you NOT insider trade once you're a C-level or politician? Your decisions literally change the market. Unless they pass a law that monitors every single transaction of every person of interest, and even then, I'm sure my RIA would love to know if I had a juicy tidbit and could trivially hide it, I just don't see how you ever stop it. That world isn't made for the people on HN.
- jaltekruse 5y ago
  Fine, your decisions will impact the value of the stock. Prevent insider trading by requiring them to commit to a long term trading strategy. Make them commit a long period in advance if they want to make any trades. I understand there are regulations that require this of many executives, but as the article seems to make pretty clear there is still plenty of wiggle room make extra money off of secret knowledge and get away with it.
  - SavantIdiot 5y ago
    > the article seems to make pretty clear there is still plenty of wiggle room make extra money off of secret knowledge and get away with it. Fine? That's my point. Can't be done. Like trying to forbid certain strata of civil servants from using encrypted communications.
- SyzygistSix 5y ago
  Put investments in blind trusts or even index funds that do not allow for granular control by people with powerful positions. That the laws cannot stop all asymetrical knowledge is no reason to not limit the most egregious abuses. High level politicians are paid well. Choosing public service may mean you give up the chance at stratospheric levels of wealth and that is okay.
colordrops 5y ago
"Is the Stock Market Rigged" should become a new answer to obvious questions, similar to "is the pope catholic" and "does a bear shit in the woods".
- ryanlol 5y ago
  What does “rigged” mean?
  - colordrops 5y ago
    From oxford dictionary: manage or conduct (something) fraudulently so as to produce a result or situation that is advantageous to a particular person. "charges of vote-rigging" Similar: manipulate arrange fraudulently interfere with influence gerrymander juggle massage distort misrepresent pervert maneuver tamper with tinker with doctor falsify forge fake engineer trump up fix cook fiddle cause an artificial rise or fall in prices in (a market, especially the stock market) with a view to personal profit. "he accused games manufacturers of rigging the market"
    - ryanlol 5y ago
      I don’t think you can meaningfully state that the entire stock market is rigged. There are simply too many people trying to do the rigging.
jkhdigital 5y ago
Matt Levine had a pretty good column on this the other day: https://www.bloomberg.com/opinion/articles/2021-09-29/insiders-are-good-at-trading https://www.bloomberg.com/opinion/articles/2021-09-29/inside... His point, which is pretty much impossible to argue with, is that insiders always have material nonpublic information about the companies they work for, so treating “insider trading” as a categorical evil that must be totally eliminated is just denying reality. You would have to bar insiders from ever trading their own stock under any circumstances, which seems silly. The alternative view is basically “who cares”, and that barring insiders from trading freely actually impedes efficient price discovery. A compromise might be to require insiders to at least publicly disclose all trades, so that markets know when insiders are making moves.
- JumpCrisscross 5y ago
  Simple solution seems to be a forced delay between placing an order and it executing. So if an insider wants to sell, they place a binding order today and then it executes after N days or weeks.
  - agumonkey 5y ago
    Ah, interesting. Batching orders would indeed change the dynamics
- mthoms 5y ago
  >You would have to bar insiders from ever trading their own stock under any circumstances, which seems silly. Why is it silly? It seems perfectly reasonable to me. There are 10's of thousands of other stocks to trade.
  - pgodzin 5y ago
    Because an equity stake is a huge percentage of compensation for a company, and it's much easier to give shares of the company rather than cash. And those receiving shares should be able to sell it.
joshsyn 5y ago
Insider Trading is one of the stupid laws I have come across. There is always going to be asymmetry in information.
grey-area 5y ago
It’s worse than that, those tasked with overseeing the market, including Federal officials, are also trading on inside information with impunity, from Pelosi to Powell https://www.bloomberg.com/news/articles/2021-10-01/clarida-traded-into-stocks-on-eve-of-powell-pandemic-statement https://www.bloomberg.com/news/articles/2021-10-01/clarida-t... https://www.dailymail.co.uk/news/article-10004691/Fed-Chairman-Powell-owned-type-assets-led-ethics-review-Fed.html https://www.dailymail.co.uk/news/article-10004691/Fed-Chairm... The President of Robinhood is front-running customers with impunity. https://mobile.twitter.com/EpsilonTheory/status/1443266599251755008 https://mobile.twitter.com/EpsilonTheory/status/144326659925... There are regulations but no enforcement except for smaller players within the financial industry.
- deevolution 5y ago
  Regulators have too much power and influence on markets - they're worried about market manipulation but as far as I'm concerned they are the only ones manipulating markets.
- carnitine 5y ago
  That story says that Powell had owned a relatively small allocation of munis for years, before the Fed bought munis as part of QE triggered by an unexpected pandemic, which makes perfect sense given their aims. Very hard to call that insider trading in general, and it hardly even seems morally dubious compared to what people like Pelosi seem to be up to.
  - grey-area 5y ago
    The chairman of the fed simply shouldn’t own the assets the fed might buy. That’s a clear conflict of interest. But you’re right there are more clearly corrupt officials including two fed presidents. This is a systemic problem of poor enforcement and violated norms. The rule of law matters and regulators should be above reproach.
    - dageshi 5y ago
      The issue is I suppose, what can a Fed chairman invest his/her personal money in that absolves him/her of a conflict of interest? The fed's policies affect every area of the financial system. Can't put it in a bank because they'll almost certainly be above the insured amount and will have an incentive to bail out that bank if it's in trouble, another conflict of interest. Perhaps some special account at the fed that pays a specific interest rate and is fully insured? But then why do Fed presidents get special access to such an account that normal folks don't? I don't know that there is anywhere he could put his money and be above reproach, him putting his money in muni's seems like a good faith effort to do that though.
rindall 5y ago
What about crypto trading? I do think that it is quite rigged, and the whales manipulate and dictate the price action.
jsemrau 5y ago
Is it really rigged though? The main driver gains has always been information arbitrage. Where the successful investor knows something about the market that noone else does. Nowadays a lot of information is out there and nothing stops you from trading like the Senators. The information out there. Well, it's on finclout at least.
- cblconfederate 5y ago
  OK then if information arbitrage is a thing of the past, is the stock market needed ?
akrymski 5y ago
Previously discussed: https://news.ycombinator.com/item?id=28692640 https://news.ycombinator.com/item?id=28692640 Does HN allow multiple submissions for the same URL now?
- throwaway2048 5y ago
  I don't see any discussion at that link
EMM_386 5y ago
Oh it's rigged alright. How do you think we got that miraculous bounce post-Covid? The Federal Reserve had to step in with ~$8 trillion and start buying stocks. Two Fed presidents had to step down recently due to their stock holdings. They had to do this to save everyone's retirement accounts and the housing market. And now we have inflation and this will get blamed on the President's policies. It has nothing to do with that, it's this massive injection of cash into the system. They may have gone a little overboard. They are trying to slowly unwind this. Until then it's "party like it's the 1920s". https://www.cnbc.com/2021/09/27/dallas-fed-president-kaplan-to-retire-early-on-oct-8-citing-trading-disclosure-distraction.html https://www.cnbc.com/2021/09/27/dallas-fed-president-kaplan-...
mihaic 5y ago
I honestly believe the only way out of this would be to stop trading for the general population, by enacting strong regulation. Having all middle-class adults be experts on stocks, NFTs, what new fork some shitcoin is having, etc., is a huge waste, and ultimately funnels more money to the wealthy class, that obviously have information and capital advantages. If society keeps seeing investing as an absolutely necessary thing for financial stability, we can't expect politicians and executives to not be corrupted.
WouterZ 5y ago
Nooo, the American cap markets are unfair? What a surprise. America is possibly the most self deluded country in the world. Go enjoy your American dream, the rich people that is.
cannabis_sam 5y ago
Obviously..? What kinda of insane naivety is required to believe the opposite?
gverrilla 5y ago
What's funny about this is people thinking it wouldn't be rigged in the first place for some (fantastic) reason. Economy is the new religion.

This feels like an extended ad for tipranks.com

Nancy pelosi's trading returns beat every well known investor, she is running far lower amounts of capital, but shes averaging 70% a year. Meanwhile, the rest of us slave away at our jobs like cattle, and listen to her speak on TV about "fighting for our rights, justice, equality"

paulgb 5y ago
Does that 70% figure come from someone modeling out her portfolio based on the filings? I'd love to see it if it's public. Just as a gut reflex that seems high even with someone who had the amount of inside info she has, but not saying it's impossible.
lisper 5y ago
This sort of claim really requires a reference.
- smoyer 5y ago
  This one is most memorable to me: https://thehill.com/homenews/senate/488593-four-senators-sold-stocks-before-coronavirus-threat-crashed-market https://thehill.com/homenews/senate/488593-four-senators-sol... Not only is it insider trading, it's clear that the briefing indicated the amount of suffering that was coming to their constituents.
  - xyzzyz 5y ago
    Your reference does not even mention Pelosi. It does not allege “insider trading” either, but rather suggests breach of STOCK Act. This is not the same thing as insider trading, which is about breaching fiduciary duty to shareholders.
    - smoyer 5y ago
      Feinstein, Pelosi ... apparently I can't tell the difference (funny how my mind specifically recalled this article). Sorry about that!
    - fourstar 5y ago
      Imagine shilling so hard for politicians like this.
  - aaomidi 5y ago
    https://twitter.com/nancytracker?s=21 https://twitter.com/nancytracker?s=21 theres even a Twitter tracking her shit now.
- fourstar 5y ago
  Oh no! Not my heckin’ politicianerinos doing something unethical and illegal!!
orwin 5y ago
So i researched your claim, i found a twitter thread and a Greenwald post supporting you, but with no data (i did not find the 70% returns/year averages) and then i found this[0] that explain how well her husband ran during the pandemic (TBF he ran as well as i did, 40% returns, better than when i was playing online poker, with a lot less time invested). In any case, this is distasteful and gross. Every bill should have an estimated impact on publicly traded companies, and politicians with stocks should be forbidden to discuss/mediate the bill, and only vote on it. [1]" https://www.forbes.com/sites/forbes-personal-shopper/2021/10/01/flexispot-comhar-adjustable-standing-desk-review-on-sale/?sh=1959522d294a https://www.forbes.com/sites/forbes-personal-shopper/2021/10...
- solveit 5y ago
  > Every bill should have an estimated impact on publicly traded companies I don't think this is feasible. > and politicians with stocks should be forbidden to discuss/mediate the bill, and only vote on it. But I'll go one further on this. No person holding public office above a certain level should be allowed to trade individual stocks. Either buy broad-market indices or have a third-party invest for you without your knowledge on specifics.
  - IAmGraydon 5y ago
    Policy can move broad market ETFs just as much as individual stocks.
    - raziel2701 5y ago
      It's the type of imperfect solution we need. Currently Senator Manchin is holding up the infrastructure bill because its plans to combat the climate crisis will impact his million-dollar investments in the coal and energy industries [1]. These people should not be allowed to hold any kind of private or public stock other than ETFs of the S&P 500 index. This way you remove the conflict of interest in favoring one sector/company over another and instead if they want to make money through the market they can do so by helping the overall economy instead. [1] https://www.businessinsider.com/senator-joe-manchin-half-million-year-coal-stocks-climate-crisis-2021-9 https://www.businessinsider.com/senator-joe-manchin-half-mil...
jahewson 5y ago
70% does not come close to beating every well known investor, including her investor husband. She had a good year. When that happens 100-200% returns are not unheard of. Once you annualise the numbers it becomes far more pedestrian.
matheusmoreira 5y ago
> Meanwhile, the rest of us slave away at our jobs like cattle Dehumanizing, isn't it? Working hard to contribute to society while these people accumulate 10, 100, 1000 times our yearly salaries in seconds by playing some market. The world we live in is so absurd, it's such a joke.
- iratewizard 5y ago
  The fairness that we have is a gift given to us by the winners of unfair power struggles. Things can always be more fair, sure. But it's hard to ignore losing when you're winning all the time.
- booleandilemma 5y ago
  Aren’t all/most of the congresspeople millionaires? We’re ruled over by the rich.
  - coryrc 5y ago
    They're mostly really old. At this point, retiring a millionaire or near-to-it is required to live a middle-class lifestyle.
  - SyzygistSix 5y ago
    We vote them into office. Or at least the small minority who bother to vote in the primaries do.Candidates that are closer to working class tend to lose in the primary elections despite the amount of information online and how easy it is to access compared to the past.
- jkhdigital 5y ago
  Is there some other world that would be less joke-like? I mean one that has actually existed, not a utopian fantasy.
varelse 5y ago
It would be nice if Nancy Pelosi were not the classic strawman here. I don't excuse her behavior either but it's totally legal for now and there are so much worse out there. Yet they never come up it's always Nancy Pelosi and that's just creatively bankrupt. So here are 36 more... https://www.businessinsider.com/congress-stock-act-violations-senate-house-trading-2021-9 https://www.businessinsider.com/congress-stock-act-violation...
- bitexploder 5y ago
  It’s actually not legal. See: the STOCK act. It’s just not enforced.
  - lastofthemojito 5y ago
    "Not enforced" and "legal" are close enough to be considered synonyms in everyday speech. You often hear people say that marijuana is legal in Amsterdam. It is in fact illegal, but it exists in a funny grey area where it is tolerated and police don't enforce laws against recreational marijuana use. Enough that there's an entire "coffeeshop" culture that's sprung up there around marijuana use. So yeah, hearing "there's a law against this but there's no enforcement of that law"...most people shrug and say, "ok, that's legal".
    - ipaddr 5y ago
      It is decriminalized for personal use. Not exactly the same as not enforced. Not enforced means a cop could decide to enforce this on you for leverage or personal reasons.
    - chrismcb 5y ago
      No one, in their right mind would confuse "legal"and "not enforced." Most people understand the difference and would not use the synonymously. For one thing, a lot of people with principals would not do something that was illegal, even if it wasn't enforced (at least not knowingly)
  - fourstar 5y ago
paganel 5y ago
> but shes averaging 70% a year. Is there a way to "index-fund" Pelosi's investments? More generally, "index-funding" the investments made by politicians who are in a position of power would be a really interesting thing.
- fny 5y ago
  A lot of this gain has to do with leverage. Her husband loves to buy stock options which juice up typical returns significantly. Not saying there's no insider information, just that the returns are heavily amplified either way.
burnished 5y ago
Isn't it her husband who does her investing, and that is his trade? The claim is less remarkable with this in mind.
- omginternets 5y ago
  Is it? You don’t think pillow talk factors into this?
  - burnished 5y ago
    Factors? Sure. But I don't think its the big scandal everyone tries to make it out as. Which you can kind of tell because the story never includes any of the pertinent facts, its just boiled down to the most sensational version.
IAmGraydon 5y ago
I did 400% in 2020 and over 500% in 2021. No insider trading here. It is possible.
- smallhands 5y ago
  please can we talk ? spikezleedotgmail.com
RickJWagner 5y ago
Bah, she's a piker. Hillary Clinton made hundreds of thousands on 'cattle deals', with no knowledge of the workspace and quick turnarounds. But they're not even close to Hunter Biden's league.
zz865 5y ago
> shes averaging 70% a year. Source? Sounds like someone just made it up. This page said they went from 41 to 115 in 14 years, which is more like 12% a year. https://www.opensecrets.org/news/2020/04/majority-of-lawmakers-millionaires/ https://www.opensecrets.org/news/2020/04/majority-of-lawmake...
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fourstar 5y ago
Maybe it’s time said “cattle” wake up? All politicians are actors acting in their own self-interest.
SavantIdiot 5y ago
I hate that she's a hypocrite. But there are so many better people then her in the party (e.g., Wyden & AOC), and it's not like I'm going to run and join the dumpster fire known as the QOP. I mean, what is the QOP really doing to help? Nada, they've just made it 12 trillion times worse from 2000-2008 and 2016-2020 (Ignoring the 80's entirely). At least the dems are helping the middle class every day even if some are stealing while doing it. Better than just a cross-shaped boot in the face while stealing.
NicoJuicy 5y ago
Her husband was already a successful investor before Nancy went into politics. And because of their wealth, she could dedicate worked for the party for free for 20 years. Which got her to where she is now. I would be more concerned with presidents who are known to spread/say things to try to influence the market.
sumedh 5y ago
Dont forget Chris Collins was caught for giving insider tips to his son and others and was going to jail for that when Trump pardoned him.

AlbertCory 5y ago

> "In two decades the SEC hasn’t brought a single insider trading case involving trades made under a 10b5-1 plan." Ladies and gentlemen of the jury: the defendant changed his 10b5-1 plan multiple times, and one of those times he profited hugely from it. The defendant's excuse that his advisor told him to do it and he needed the money for his daughter's college is just unpersuasive. Anyone see why a prosecutor might be reluctant to bring such a case? It might well be true, but the jury may or may not stay awake long enough to agree. Best to concentrate scarce resources on cases you CAN win. Note that I'm not saying insider trading is harmless; just that it's like illegal drugs: no policies will stamp it out entirely.

smolder 5y ago
"No policies we have tried or are collectively willing to try will stamp it out" is the accurate version of your ending statement, whether talking about drugs or insider trading. It's unreasonable to rule out every policy as only an infinitesimal portion have been explored. How best to organize humanity might be the least solvable and most open ended problem conceivable, one worthy of a multiverse scale simulation. We can't make solid predictions about what inputs lead to what outcomes. Species-wide conclusions about the impossibility of ending some specific immoral behavior depend on an expectation of irrationality from people, that they're unable to abandon the status quo.
- satellites 5y ago
  Additionally, what is “immoral” is relative. I think an individual choosing to consume illegal drugs is perfectly moral, but lots of people disagree about that.

imgabe 5y ago

I'm more than willing to believe there's insider trading, but the data presented at the beginning is not convincing. > Of the 496 trades [Filler has] made since 2014 in Alabama’s ServisFirst Bancshares Inc., where he sits on the board of directors, and Century Bancorp Inc. of Massachusetts, where he’s the largest shareholder, 372 of them, or 75%, have shown a profit three months later. > Besides Filler, other TipRanks stars include Steve Mihaylo, the CEO of telephone services company Crexendo Inc., where he owns a $60 million stake. Mihaylo has turned a three-month profit on 83% of his trades over the past five years even as Crexendo’s shares have seesawed. We've also had an unprecedented bull market over the past 10 years. If you pick any random stock at any time and hold it for three months, what are the odds that it will be worth more? The article compares the returns to the S&P500, but that is the net performance of those 500 stocks. You'd have to compare it to the base rate of picking a random stock to see if it's actually remarkable. Maybe the S&P 500 performed lower because 75% of the stocks in it went up and 25% went down. But that means that if you randomly pick one stock, you'd have a 75% chance of it being one of the ones that went up, and you'd outperform the S&P500. (Well, not quite, maybe it could go up, but not as much as the S&P500 as a whole. But still, most of the stocks that go up, would have to go up more than the average of the whole index in order to compensate for the ones that go down) Later in the article, when they mention that insiders tend to reliably sell stock ahead of bad news, that seems much more damning.

Retric 5y ago
Individual stocks are surprisingly random across three month stretches even in bull markets. 75% is significantly outperforming in terms of random individual stock picks over the last 10 years. The real issue is people wouldn’t bring it up if the number wasn’t “shocking”. Which self selects for outliers.
- zeptonix 5y ago
  Right, stocks [which are just proxies for companies] are completely random because of <random bs paper from E. Fama from 51 years ago>. Because, of course, how would it ever be possible to predict how a company might perform? That must surely be impossible, because TradFi economics has decided it must be. And then people just continually parrot the same stuff they've heard and it becomes more and more accepted as fact. I just hate hearing these same narratives being repeated because... they've already been repeated. Why must stock returns be random? It's predicting whether a company is going to do well or not, which has nothing to do with randomness. And yet people (like this commenter) just keep repeating this stuff, absolutely endlessly. They don't even know why they're doing it (try asking him) -- they just keep doing it.

88j88 5y ago

OBVIOUSLY

deleted 5y ago

[deleted]

c7DJTLrn 5y ago

The idea that some people will not use their knowledge to game the system is absurd. I know there's ways of tracking down people via trading patterns but what's to stop an insider selling information to someone completely untied to them and profiting that way? As long as it isn't made obvious by the trader, that would be an untraceable form of insider trading. Maybe we should just demand all information be open.

xpe 5y ago
> Maybe we should just demand all information be open. This is both theoretically and practically impossible.
xpe 5y ago
> I know there's ways of tracking down people via trading patterns but what's to stop an insider selling information to someone completely untied to them and profiting that way? Many things: Records of communications. People talk.
notyourwork 5y ago
It’s possible to commit a crime but it’s also possible to get caught. Not sure what grounds your argument stands on.

etaioinshrdlu 5y ago

Imagine an alternate reality where all stock holding info is public, with names attached, (Everyone's! Including yours!). There are also no insider trading rules. Such a system seems possibly fairer and more efficient than what we have now.

tacostakohashi 5y ago
That reality sounds pretty similar to what we have. Pretty much everything of consequence is on a 13-D, 13-F, 13-G , etc.
- chii 5y ago
  the reporting time might be too long for it to matter. What is needed is instantaneous reporting.
jcpham2 5y ago
Do you mean something like a distributed, immutable, permissionless database that everyone can query?
- satellites 5y ago
  Or a well-audited public ledger overseen by democratic institutions. Bonus if it doesn’t consume the electricity of an average nation to operate.
  - jkhdigital 5y ago
    > well-audited public ledger overseen by democratic institutions Yes, because democratic institutions have such a great track record of managing things like this
    - satellites 5y ago
      As opposed to what? The wonderfully secure blockchain-based alternatives where redress for fraud and theft is still handled by… those stodgy old institutions?

toss1 5y ago

Considering that they have been going at the problem for more than half a century, and if anything, making negative progress, perhaps there is a better approach. How about: make all trades 100% transparent in real time, and nevermind the insider trading laws? If Jack Smith, the CFO of XYZ Corp, sells 300 shares at 11:04:00 AM, you can know about it by 11:04:01. Sure, Jack still has an advantage, but now his trade is ACTUALLY providing information to the market. It is one thing for TipRanks to provide analysis two days after, another thing for them to be able to do it in almost real-time, or setup a Fast Follower fund... Seems there's only good to be gained here, and the insiders won't have to worry about prosecution.

paulpauper 5y ago

Cheating at a game does not mean the game itself is rigged.

aynyc 5y ago
If the game allows cheating for certain group of players, then the game is rigged.
- WhisperingShiba 5y ago
  Maybe broken instead of rigged? Or as a collective, we don't know the game theoretic best move to get out. It all comes down to education at the end of the day, that's why we use hackernews.
  - deleted 5y ago
    [deleted]

motohagiography 5y ago

It's not rigged. If you think the stock market is rigged, you'd have to apply similar lens to the factors that influence it like inflation stats, employment numbers, gold and other metals prices, interest rates, and currently, home prices, food and fuel prices, and all the other scientifically collected data that supports policy. Markets are the sum of the information everyone has about prices (even if that's not evenly distributed), and if you could co-ordinate to rig that, you could rig literally anything. If it were even possible to rig any, let alone all, of those things, the whole thing would be as fragile as the narrative that held it together. It couldn't exist. We'd only ever be one viral tweet away from total civilizational meltdown. I get that connected insiders need more scrutiny and maybe making some high profile examples would set the tone, but that some bad actors don't bring the whole thing down is more of a feature than a bug in this case.

wtallis 5y ago
> Markets are the sum of the information everyone has about prices (even if that's not evenly distributed), and if you could co-ordinate to rig that, you could rig literally anything. The market being rigged (in the casual sense used here) does not require anyone to be manipulating all of the factors that affect prices; you just need to be able to cheat on some input to the system. Trading on non-public information may not always be a successful strategy because you might get unlucky and some other factors could unpredictably outweigh the impact of the insider information you're basing your trades on—but on average, insider trading works until/unless you are caught and prosecuted.
xpe 5y ago
> Markets are the sum of the information everyone has ... This leaves out some key facts: different people have access to information at different times. It isn't fair (and it isn't good for market efficiency) for insiders to act on their inside information. This isn't disputed.
- sokoloff 5y ago
  I agree insider trading isn’t fair. It’s much less clear to me that insider trading harms market efficiency. I think we accept the increased inefficiency (from barring insider trading) in the name of fairness and resulting trust in the market.

throwaway81523 5y ago

Both people involved are now deceased, and while I heard this story from one of the principals, I have my doubts. But fwiw: I knew a guy who was close buddies with the outside accountant for a Fortune 500 company. One of the accountant's duties was to file a quarterly document with the SEC with the company's financial results. That was before this was done online. The contents of the document, before filing, were very confidential and using or disclosing them would have been illegal inside trading. However, as the story goes, the instant the document was in the SEC's possession, its contents were considered public and people with the info were allowed to use it (maybe not the accountant himself because of some special rules). And so, according to how I was told, the accountant, after dropping off the document and walking out of the SEC building, would pull out his cell phone and call his buddy from the front steps with the relevant info. The buddy would then make trades on the now-"public" info that no one else yet knew, because it was still on a piece of paper in the SEC office that no one had yet looked at. Could it really have been that easy? This would have been the 1980s or so, I think. I think they had cell phones then, but if not, they had pay phones.

leoc 5y ago
The original handheld "brick" phone, the https://en.wikipedia.org/wiki/Motorola_DynaTAC https://en.wikipedia.org/wiki/Motorola_DynaTAC , came out in 1984. This was the beginning of the period when cellular phones were seen as expensive status symbols and specialist equipment. (In fact the phones were often still carphones and transportables https://www.mobilephonehistory.co.uk/arcticles/80s_brick_phones.php https://www.mobilephonehistory.co.uk/arcticles/80s_brick_pho... .) Then in the early '90s, about the time that GSM digital service came in, prices began to drop sharply and wide adoption began. (One sign of the change which got some attention at the time was that the SWP https://en.wikipedia.org/wiki/Socialist_Workers_Party_(UK) https://en.wikipedia.org/wiki/Socialist_Workers_Party_(UK) , a somewhat ersatz radical-left UK fringe party, was seen using mobile phones to organise its then very successful steet demos.)
siruncledrew 5y ago
It probably happens even more now than in the 1980s. The speed of communication outpaces the speed of government bureaucracy so it’s easy to take advantage of a technicality to make huge profits. It’s like university exams when a friend in a morning class would take an exam and then tell others in the afternoon class about the questions and what to expect before taking the exam. The no guarantee the exams would be the say, but even if some questions overlap it makes a big difference. In the case of university, I’m pretty sure this would be some kind of honor policy violation with repercussions if found out, and for Wall St it’s probably not even as tough as uni.

darig 5y ago

Is there ANY chance it isn't rigged? That's the real question.

darksaints 5y ago

If you think insider trading is bad, wait til you see what the Federal Reserve board gets to do, all completely legally, in currency markets. They write their own paychecks out of thin air.

cced 5y ago
What does the Federal Reserve board get to do?
- darksaints 5y ago
  Reliably determine the direction of a $6T/day market, trade in it with no laws on insider trading or public disclosure requirements, and do it all with exemptions on leverage restrictions.

theshadowknows 5y ago

There was an Addams family episode way back where Gomez was depressed because everything he did would win big. So he decided to dump all of his shares of some stock that he knew was going to go up. And when news spread that he’d done it the stock tanked and he ended up “winning” because he saved so much money by selling before the huge dip. I’ve always thought that was interesting.

stonecharioteer 5y ago
I remember that episode! It was about him being bad at losing. He lost at losing lol.

numair 5y ago

Remember, you can trade stocks without trading stocks. What do I mean? Mark Cuban sold a collar on his Yahoo stock through Goldman for $[I forget] billion dollars. That was an off-market trade in which someone bought his entire block off of him. In today’s world, with tons of low interest (as in, single/double-digit basis points) loans and other fun weird contraptions, you have a lot more options to trade without trading. I have no grand reveal here, but there’s probably an entire “dark dataset” regarding that activity that is missing from this conversation.

gitfan86 5y ago
Also a lot of shorts exist because if you are long X $1 and short Y $1 your total investment is $0.
- Kranar 5y ago
  This is false, if you're long one security and short another, your total cost basis is the sum of the absolute value.
- test6554 5y ago
  How is that not apples and oranges. You buy one orange and eat one apple and thus everything is in its original state?

SavantIdiot 5y ago

How can you NOT insider trade once you're a C-level or politician? Your decisions literally change the market. Unless they pass a law that monitors every single transaction of every person of interest, and even then, I'm sure my RIA would love to know if I had a juicy tidbit and could trivially hide it, I just don't see how you ever stop it. That world isn't made for the people on HN.

jaltekruse 5y ago
Fine, your decisions will impact the value of the stock. Prevent insider trading by requiring them to commit to a long term trading strategy. Make them commit a long period in advance if they want to make any trades. I understand there are regulations that require this of many executives, but as the article seems to make pretty clear there is still plenty of wiggle room make extra money off of secret knowledge and get away with it.
- SavantIdiot 5y ago
  > the article seems to make pretty clear there is still plenty of wiggle room make extra money off of secret knowledge and get away with it. Fine? That's my point. Can't be done. Like trying to forbid certain strata of civil servants from using encrypted communications.
SyzygistSix 5y ago
Put investments in blind trusts or even index funds that do not allow for granular control by people with powerful positions. That the laws cannot stop all asymetrical knowledge is no reason to not limit the most egregious abuses. High level politicians are paid well. Choosing public service may mean you give up the chance at stratospheric levels of wealth and that is okay.

colordrops 5y ago

"Is the Stock Market Rigged" should become a new answer to obvious questions, similar to "is the pope catholic" and "does a bear shit in the woods".

ryanlol 5y ago
What does “rigged” mean?
- colordrops 5y ago
  From oxford dictionary: manage or conduct (something) fraudulently so as to produce a result or situation that is advantageous to a particular person. "charges of vote-rigging" Similar: manipulate arrange fraudulently interfere with influence gerrymander juggle massage distort misrepresent pervert maneuver tamper with tinker with doctor falsify forge fake engineer trump up fix cook fiddle cause an artificial rise or fall in prices in (a market, especially the stock market) with a view to personal profit. "he accused games manufacturers of rigging the market"
  - ryanlol 5y ago
    I don’t think you can meaningfully state that the entire stock market is rigged. There are simply too many people trying to do the rigging.

jkhdigital 5y ago

Matt Levine had a pretty good column on this the other day: https://www.bloomberg.com/opinion/articles/2021-09-29/insiders-are-good-at-trading https://www.bloomberg.com/opinion/articles/2021-09-29/inside... His point, which is pretty much impossible to argue with, is that insiders always have material nonpublic information about the companies they work for, so treating “insider trading” as a categorical evil that must be totally eliminated is just denying reality. You would have to bar insiders from ever trading their own stock under any circumstances, which seems silly. The alternative view is basically “who cares”, and that barring insiders from trading freely actually impedes efficient price discovery. A compromise might be to require insiders to at least publicly disclose all trades, so that markets know when insiders are making moves.

JumpCrisscross 5y ago
Simple solution seems to be a forced delay between placing an order and it executing. So if an insider wants to sell, they place a binding order today and then it executes after N days or weeks.
- agumonkey 5y ago
  Ah, interesting. Batching orders would indeed change the dynamics
mthoms 5y ago
>You would have to bar insiders from ever trading their own stock under any circumstances, which seems silly. Why is it silly? It seems perfectly reasonable to me. There are 10's of thousands of other stocks to trade.
- pgodzin 5y ago
  Because an equity stake is a huge percentage of compensation for a company, and it's much easier to give shares of the company rather than cash. And those receiving shares should be able to sell it.

joshsyn 5y ago

Insider Trading is one of the stupid laws I have come across. There is always going to be asymmetry in information.

grey-area 5y ago

It’s worse than that, those tasked with overseeing the market, including Federal officials, are also trading on inside information with impunity, from Pelosi to Powell https://www.bloomberg.com/news/articles/2021-10-01/clarida-traded-into-stocks-on-eve-of-powell-pandemic-statement https://www.bloomberg.com/news/articles/2021-10-01/clarida-t... https://www.dailymail.co.uk/news/article-10004691/Fed-Chairman-Powell-owned-type-assets-led-ethics-review-Fed.html https://www.dailymail.co.uk/news/article-10004691/Fed-Chairm... The President of Robinhood is front-running customers with impunity. https://mobile.twitter.com/EpsilonTheory/status/1443266599251755008 https://mobile.twitter.com/EpsilonTheory/status/144326659925... There are regulations but no enforcement except for smaller players within the financial industry.

deevolution 5y ago
Regulators have too much power and influence on markets - they're worried about market manipulation but as far as I'm concerned they are the only ones manipulating markets.
carnitine 5y ago
That story says that Powell had owned a relatively small allocation of munis for years, before the Fed bought munis as part of QE triggered by an unexpected pandemic, which makes perfect sense given their aims. Very hard to call that insider trading in general, and it hardly even seems morally dubious compared to what people like Pelosi seem to be up to.
- grey-area 5y ago
  The chairman of the fed simply shouldn’t own the assets the fed might buy. That’s a clear conflict of interest. But you’re right there are more clearly corrupt officials including two fed presidents. This is a systemic problem of poor enforcement and violated norms. The rule of law matters and regulators should be above reproach.
  - dageshi 5y ago
    The issue is I suppose, what can a Fed chairman invest his/her personal money in that absolves him/her of a conflict of interest? The fed's policies affect every area of the financial system. Can't put it in a bank because they'll almost certainly be above the insured amount and will have an incentive to bail out that bank if it's in trouble, another conflict of interest. Perhaps some special account at the fed that pays a specific interest rate and is fully insured? But then why do Fed presidents get special access to such an account that normal folks don't? I don't know that there is anywhere he could put his money and be above reproach, him putting his money in muni's seems like a good faith effort to do that though.

rindall 5y ago

What about crypto trading? I do think that it is quite rigged, and the whales manipulate and dictate the price action.

jsemrau 5y ago

Is it really rigged though? The main driver gains has always been information arbitrage. Where the successful investor knows something about the market that noone else does. Nowadays a lot of information is out there and nothing stops you from trading like the Senators. The information out there. Well, it's on finclout at least.

cblconfederate 5y ago
OK then if information arbitrage is a thing of the past, is the stock market needed ?

akrymski 5y ago

Previously discussed: https://news.ycombinator.com/item?id=28692640 https://news.ycombinator.com/item?id=28692640 Does HN allow multiple submissions for the same URL now?

throwaway2048 5y ago
I don't see any discussion at that link

EMM_386 5y ago

Oh it's rigged alright. How do you think we got that miraculous bounce post-Covid? The Federal Reserve had to step in with ~$8 trillion and start buying stocks. Two Fed presidents had to step down recently due to their stock holdings. They had to do this to save everyone's retirement accounts and the housing market. And now we have inflation and this will get blamed on the President's policies. It has nothing to do with that, it's this massive injection of cash into the system. They may have gone a little overboard. They are trying to slowly unwind this. Until then it's "party like it's the 1920s". https://www.cnbc.com/2021/09/27/dallas-fed-president-kaplan-to-retire-early-on-oct-8-citing-trading-disclosure-distraction.html https://www.cnbc.com/2021/09/27/dallas-fed-president-kaplan-...

mihaic 5y ago

I honestly believe the only way out of this would be to stop trading for the general population, by enacting strong regulation. Having all middle-class adults be experts on stocks, NFTs, what new fork some shitcoin is having, etc., is a huge waste, and ultimately funnels more money to the wealthy class, that obviously have information and capital advantages. If society keeps seeing investing as an absolutely necessary thing for financial stability, we can't expect politicians and executives to not be corrupted.

WouterZ 5y ago

Nooo, the American cap markets are unfair? What a surprise. America is possibly the most self deluded country in the world. Go enjoy your American dream, the rich people that is.

cannabis_sam 5y ago

Obviously..? What kinda of insane naivety is required to believe the opposite?

gverrilla 5y ago

What's funny about this is people thinking it wouldn't be rigged in the first place for some (fantastic) reason. Economy is the new religion.