7 ms·

uhm it’s not even that difficult. they just see if you traded in your own account for a company you work for around earnings. i’m pretty sure you’re not suppos

by tempsy 5y ago

uhm it’s not even that difficult. they just see if you traded in your own account for a company you work for around earnings. i’m pretty sure you’re not supposed to do it at all but maybe dependent on the situation.

ethbr0 5y ago
You're not supposed to do that at all. You could argue you didn't possess any material non-public information, but since essentially every internal document you access is non-public information, that's probably not an argument you want to deal with. Just trade your own company's shares in the windows after earnings releases. Or set up a pre-defined share sale plan in one of these windows, covering the future, and don't touch it.
- mgfist 5y ago
  Many companies, and (most?) tech companies have trading black out periods that are lifted for about a month a few days after earnings. It applies to your personal brokerage account too, even though they can't technically enforce it.
  - jdmichal 5y ago
    I worked at a bank. They 100% had access to my personal brokerage accounts. It was a condition of employment.
    - labcomputer 5y ago
      Yes, banks do that. Many even prohibit employees to have personal brokerage accounts at other banks (How does that work for a married couple that work for different banks? There are exceptions which require additional disclosures, like submitting you spouse's and/or minor child's monthly statements within some short time frame). Banks are the exception. Very, very few not-a-bank companies do that.
- sidewndr46 5y ago
  > Or set up a pre-defined share sale plan in one of these windows, covering the future, and don't touch it. The insider trading training I did at one company specifically mentioned this is against SEC rules and is insider trading. I am unsure if that is actually true, but that is what the company expected us to operate as.
  - tempsy 5y ago
    i follow the market pretty closely and executives and board members often have pre-defined sales plans that will sell shares right before earnings. not sure if it’s open to employees. personally don’t think it’s fair but it seems to be legal as is.
  - toast0 5y ago
    Setting up a 10b5-1 plan with your broker when you don't have material, non-public information, and your broker follows the plan is the way to trade in employer stock with a solid footing if you regularly have material non-public information. (Such as, in this case, a major change in business metrics). Your company may not permit regular employees to setup a 10b5-1 plan, I think they need signof by corporate legal; and in that case, any trading that happens in your account could be considered insider trading based on your knowledge when the trade executes (or possibly when it's entered/while it's open... details are sort of fuzzy), regardless of if you or your agent made the trade, or even if the trade was automatic due to margin or something.
    - ethbr0 5y ago
      IANAL, but a 10b5-1 plan (thanks for reminding me of the naming!) is an affirmative defense, that removes insider trading liability if a trade satisfies all of its conditions. Effectively, (1) the plan is created when one does not have material nonpublic information, (2) that it... "- Specified the amount of securities to be purchased or sold, price, and date; - Provided a written formula or algorithm, or computer program, for determining amounts, prices, and dates; or - Did not permit the person to exercise any subsequent influence over how, when, or whether to effect purchases or sales; provided, in addition, that any other person who exercised such influence was not aware of the material nonpublic information when doing so." [0] ... and (3) that the trade as executed did not attempt to subvert (2). So it's not really something you need to have your corporate legal agree to for it to be valid (although legal may require or encourage you to do so, to limit exposure of company officers botching it). You simply have to set up a plan that satisfies the test with your broker, then claim it as your defense if the SEC comes after you. A note on a napkin saying "Sell 5,000 shares 3 days before every earnings call, as long as the RSI is >50" would seem to suffice, provided you didn't subsequently meddle. [0] https://www.federalregister.gov/documents/2022/02/15/2022-01140/rule-10b5-1-and-insider-trading https://www.federalregister.gov/documents/2022/02/15/2022-01...
RC_ITR 5y ago
>The Securities and Exchange Commission today announced insider trading charges against three software engineers employed at Twilio, Inc., a San Francisco-based cloud computing communications company, and four family members and friends for allegedly generating more than $1 million in collective profits by insider trading ahead of the company’s positive first quarter 2020 earnings announcement on May 6, 2020. This, along with the 'Tipper/Tippee' language implies that the named engineers did not in fact trade in their own accounts.
- tempsy 5y ago
  i mean it’s not clear it could have been all of them. not really the point i’m making..yes it could have been done exclusively using family that the government clearly knows you’re linked to. maybe more difficult with friends.
  - RC_ITR 5y ago
    Please read the articles before commenting on them: >Sure, Lagudu and Chotu Pulagam knowingly tipped off, or used the brokerage accounts of, their family and close friends – Dileep Kamujula, Sai Nekkalapudi, Abhishek Dharmapurikar and Chetan Pulagam – to trade Twilio options and stock in advance of its May 6,
    - usea 5y ago
      > Please read the articles before commenting on them: You don't have to read an article before commenting. Trying to make up rules and hold other people to them is neither kind nor constructive. Your interpretation of their post is not charitable. It's explicitly against the guidelines to accuse someone of not reading the article. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
    - tempsy 5y ago
      ok? what is the point? they tipped off family but sharing in the gains. sorry i said “their own personal account” and not “their family” which they lazily used to try to hide the trading activity?
shitlord 5y ago
The fact that they traded options (probably deep OTM) is the cherry on top. How incompetent did they think the SEC was?

by tempsy 5y ago

ethbr0 5y ago

You're not supposed to do that at all. You could argue you didn't possess any material non-public information, but since essentially every internal document you access is non-public information, that's probably not an argument you want to deal with. Just trade your own company's shares in the windows after earnings releases. Or set up a pre-defined share sale plan in one of these windows, covering the future, and don't touch it.

mgfist 5y ago
Many companies, and (most?) tech companies have trading black out periods that are lifted for about a month a few days after earnings. It applies to your personal brokerage account too, even though they can't technically enforce it.
- jdmichal 5y ago
  I worked at a bank. They 100% had access to my personal brokerage accounts. It was a condition of employment.
  - labcomputer 5y ago
    Yes, banks do that. Many even prohibit employees to have personal brokerage accounts at other banks (How does that work for a married couple that work for different banks? There are exceptions which require additional disclosures, like submitting you spouse's and/or minor child's monthly statements within some short time frame). Banks are the exception. Very, very few not-a-bank companies do that.
sidewndr46 5y ago
> Or set up a pre-defined share sale plan in one of these windows, covering the future, and don't touch it. The insider trading training I did at one company specifically mentioned this is against SEC rules and is insider trading. I am unsure if that is actually true, but that is what the company expected us to operate as.
- tempsy 5y ago
  i follow the market pretty closely and executives and board members often have pre-defined sales plans that will sell shares right before earnings. not sure if it’s open to employees. personally don’t think it’s fair but it seems to be legal as is.
- toast0 5y ago
  Setting up a 10b5-1 plan with your broker when you don't have material, non-public information, and your broker follows the plan is the way to trade in employer stock with a solid footing if you regularly have material non-public information. (Such as, in this case, a major change in business metrics). Your company may not permit regular employees to setup a 10b5-1 plan, I think they need signof by corporate legal; and in that case, any trading that happens in your account could be considered insider trading based on your knowledge when the trade executes (or possibly when it's entered/while it's open... details are sort of fuzzy), regardless of if you or your agent made the trade, or even if the trade was automatic due to margin or something.
  - ethbr0 5y ago
    IANAL, but a 10b5-1 plan (thanks for reminding me of the naming!) is an affirmative defense, that removes insider trading liability if a trade satisfies all of its conditions. Effectively, (1) the plan is created when one does not have material nonpublic information, (2) that it... "- Specified the amount of securities to be purchased or sold, price, and date; - Provided a written formula or algorithm, or computer program, for determining amounts, prices, and dates; or - Did not permit the person to exercise any subsequent influence over how, when, or whether to effect purchases or sales; provided, in addition, that any other person who exercised such influence was not aware of the material nonpublic information when doing so." [0] ... and (3) that the trade as executed did not attempt to subvert (2). So it's not really something you need to have your corporate legal agree to for it to be valid (although legal may require or encourage you to do so, to limit exposure of company officers botching it). You simply have to set up a plan that satisfies the test with your broker, then claim it as your defense if the SEC comes after you. A note on a napkin saying "Sell 5,000 shares 3 days before every earnings call, as long as the RSI is >50" would seem to suffice, provided you didn't subsequently meddle. [0] https://www.federalregister.gov/documents/2022/02/15/2022-01140/rule-10b5-1-and-insider-trading https://www.federalregister.gov/documents/2022/02/15/2022-01...

RC_ITR 5y ago

>The Securities and Exchange Commission today announced insider trading charges against three software engineers employed at Twilio, Inc., a San Francisco-based cloud computing communications company, and four family members and friends for allegedly generating more than $1 million in collective profits by insider trading ahead of the company’s positive first quarter 2020 earnings announcement on May 6, 2020. This, along with the 'Tipper/Tippee' language implies that the named engineers did not in fact trade in their own accounts.

tempsy 5y ago
i mean it’s not clear it could have been all of them. not really the point i’m making..yes it could have been done exclusively using family that the government clearly knows you’re linked to. maybe more difficult with friends.
- RC_ITR 5y ago
  Please read the articles before commenting on them: >Sure, Lagudu and Chotu Pulagam knowingly tipped off, or used the brokerage accounts of, their family and close friends – Dileep Kamujula, Sai Nekkalapudi, Abhishek Dharmapurikar and Chetan Pulagam – to trade Twilio options and stock in advance of its May 6,
  - usea 5y ago
    > Please read the articles before commenting on them: You don't have to read an article before commenting. Trying to make up rules and hold other people to them is neither kind nor constructive. Your interpretation of their post is not charitable. It's explicitly against the guidelines to accuse someone of not reading the article. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - tempsy 5y ago
    ok? what is the point? they tipped off family but sharing in the gains. sorry i said “their own personal account” and not “their family” which they lazily used to try to hide the trading activity?

shitlord 5y ago

The fact that they traded options (probably deep OTM) is the cherry on top. How incompetent did they think the SEC was?