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>I bet insider trading is not as fun when you're unemployed and bankrupt. Not just unemployed, likely unemployable by any reputable company in the industry. A

by daenz 5y ago

>I bet insider trading is not as fun when you're unemployed and bankrupt. Not just unemployed, likely unemployable by any reputable company in the industry. Also, good on you for having integrity, but honestly what you say is too much for the average person to be tempted with. Does anyone have a solution for lowering that temptation and making these scenarios less likely?

krageon 5y ago
> too much for the average person to be tempted with The average person is basically a decent human being, so this is absolutely fine. It's the outliers that are the problem.
ar_lan 5y ago
They can probably get a job at a regional paper sales company, though.
verdverm 5y ago
You can obfuscate CII (Company Identifying Information) as much as possible. Limit the reveal to those that need to know. Auditing, and making employees aware you can see what they do with data might reduce the temptation because the risk of being discovered is (perceived to be) greater.
- kieselguhr_kid 5y ago
  Unfortunately I need to know, because if the numbers are off I need to help fix them. I do take my responsibility to keep revenue numbers within a small group of people very, very seriously, because who knows if someone else would be too tempted to act.
go_prodev 5y ago
There's no single solution, but I think it comes down to a combination of annual compliance training, decent remuneration, being aware of your team's personal situations, having auditing systems in place and monitoring employee engagement scores as a proxy for job satisfaction and trustworthiness.
bidirectional 5y ago
Legalising insider trading is the simplest solution.
- f7ebc20c97 5y ago
  Drug dealers are highly opposed to drug legalization.
- rosndo 5y ago
  Indeed, insider trading benefits everybody by adding more information to the markets, leading to more accurate prices.
  - daenz 5y ago
    To people disagreeing with this, can you give a counter argument? On face value, what rosndo said seems to make sense.
    - mchusma 5y ago
      I actually agree it should be legal, but the argument is basically one of fairness. That in the market, retail investors compete against insiders. In practice. The world is unfair, and retail investors must compete against all kinds of people with unfair advantages. If insiders could legally trade, then the ability to profit off insider trading would go down.
      - economist6373 5y ago
        It’s important to understand that the usual argument against insider trading isn’t actually about true fairness, but rather the impression of fairness. These are two different things. The argument that insider trading should be banned because it is somehow disproportionately unfair is quite weak, the argument that it creates an impression of unfairness is a much stronger one. I personally don’t believe it is a particularly good argument, but it is certainly the strongest version of the argument against insider trading.
    - 5y ago
gcheong 5y ago
That's the point at which you launch your bid for congress.
kieselguhr_kid 5y ago
I think it's a lot to be tempted with, but it's also relatively easy to stay in compliance: don't trade your company's stock during black out periods, don't talk about revenue with friends or family, and be vigilant about not publicly discussing your information. It's not a complicated code of ethics, fortunately.
gumby 5y ago
> but honestly what you say is too much for the average person to be tempted with. I think you underestimate the “average person”. Most people basically want to be good. Everything works better when that is the case — basic game theory. You see the punishment / pressure about unfairness start in early childhood. You see it in the infrastructure where this is overwhelmingly the case (e.g. shops with unguarded back entrance/exits) vs where not (armed guards outside the shops). And of course the news (cf the current HN conversation on that topic) focuses on the exceptions to the rules because, on an evolutionary biology* basis we’re always learning and reinforcing on the normal case so we are interested in the exceptions. * meant loosely…most EB is fanciful.
- dijonman2 5y ago
  people want to be good but debt and financial problems can negatively impact judgement. people take risks when they are desperate. I’m sure it happens all the time, we just heard about the ones who got caught. Personally I would never do it as I can make much more by keeping my job and the field I’m in is all about ethics and integrity. I would rather hustle with contracting or job shop to get a raise if I really needed the money.
  - asdfasgasdgasdg 5y ago
    People who are in an insider position at a publicly traded company are generally getting compensated well enough that they do not need any more. They may want more but most folks get by with much less.
    - voakbasda 5y ago
      In the US, all it takes is a run in with the legal system or emergency medical bills, and virtually anyone could find themselves in dire financial straights.
      - asdfasgasdgasdg 5y ago
        Most of the time these stories are reported, there is no indication that the motivation is paying back medical debts. Actually I've never seen it. It's normally gambling or drugs. I agree an insider with medical debt is a theoretical problem, but it doesn't seem to be an actually common occurrence.
kenrose 5y ago
> Does anyone have a solution for lowering that temptation and making these scenarios less likely? Isn't the status quo doing a sufficient job? The temptation may be there, but it's abated by the downside risk of fines, prison time, and unemployability.
deleted 5y ago
[deleted]
jwsteigerwalt 5y ago
There is no solution better than the current ones. After a company I worked with was acquired by a public company, I was given a role that included accessing to sensitive information in financial dbs. Along with that was a welcome email from the chief counsel, then every quarter came emails listing blackout dates. I nave traded in the company’s stock or options, but it would have been incredibly clear when I was prevented from doing so.
- lostcolony 5y ago
  Some companies will also work with the financial group they administer their equity and ESPP through, so you literally -can't- trade on certain dates. You probably shouldn't be buying company stock outside of those anyway, given the limited trading windows, the scrutiny, and the lack of diversification.
KerryJones 5y ago
This reminds me of the problem before we had the cash register (which Charlie Munger has talked about quite a lot). It was a constant problem, most people companies had a lot of theft. The constant ease of access was just too much for most people to do, adding in a cash register reduced this theft by a lot. It's unlikely these were "bad people" by most definitions, undisciplined, perhaps they meant to repay it, perhaps they had a serious ill. We need a modern day equivalent of a cash register.

by daenz 5y ago

krageon 5y ago

> too much for the average person to be tempted with The average person is basically a decent human being, so this is absolutely fine. It's the outliers that are the problem.

ar_lan 5y ago

They can probably get a job at a regional paper sales company, though.

verdverm 5y ago

You can obfuscate CII (Company Identifying Information) as much as possible. Limit the reveal to those that need to know. Auditing, and making employees aware you can see what they do with data might reduce the temptation because the risk of being discovered is (perceived to be) greater.

kieselguhr_kid 5y ago
Unfortunately I need to know, because if the numbers are off I need to help fix them. I do take my responsibility to keep revenue numbers within a small group of people very, very seriously, because who knows if someone else would be too tempted to act.

go_prodev 5y ago

There's no single solution, but I think it comes down to a combination of annual compliance training, decent remuneration, being aware of your team's personal situations, having auditing systems in place and monitoring employee engagement scores as a proxy for job satisfaction and trustworthiness.

bidirectional 5y ago

Legalising insider trading is the simplest solution.

f7ebc20c97 5y ago
Drug dealers are highly opposed to drug legalization.
rosndo 5y ago
Indeed, insider trading benefits everybody by adding more information to the markets, leading to more accurate prices.
- daenz 5y ago
  To people disagreeing with this, can you give a counter argument? On face value, what rosndo said seems to make sense.
  - mchusma 5y ago
    I actually agree it should be legal, but the argument is basically one of fairness. That in the market, retail investors compete against insiders. In practice. The world is unfair, and retail investors must compete against all kinds of people with unfair advantages. If insiders could legally trade, then the ability to profit off insider trading would go down.
    - economist6373 5y ago
      It’s important to understand that the usual argument against insider trading isn’t actually about true fairness, but rather the impression of fairness. These are two different things. The argument that insider trading should be banned because it is somehow disproportionately unfair is quite weak, the argument that it creates an impression of unfairness is a much stronger one. I personally don’t believe it is a particularly good argument, but it is certainly the strongest version of the argument against insider trading.
  - 5y ago

gcheong 5y ago

That's the point at which you launch your bid for congress.

kieselguhr_kid 5y ago

I think it's a lot to be tempted with, but it's also relatively easy to stay in compliance: don't trade your company's stock during black out periods, don't talk about revenue with friends or family, and be vigilant about not publicly discussing your information. It's not a complicated code of ethics, fortunately.

gumby 5y ago

> but honestly what you say is too much for the average person to be tempted with. I think you underestimate the “average person”. Most people basically want to be good. Everything works better when that is the case — basic game theory. You see the punishment / pressure about unfairness start in early childhood. You see it in the infrastructure where this is overwhelmingly the case (e.g. shops with unguarded back entrance/exits) vs where not (armed guards outside the shops). And of course the news (cf the current HN conversation on that topic) focuses on the exceptions to the rules because, on an evolutionary biology* basis we’re always learning and reinforcing on the normal case so we are interested in the exceptions. * meant loosely…most EB is fanciful.

dijonman2 5y ago
people want to be good but debt and financial problems can negatively impact judgement. people take risks when they are desperate. I’m sure it happens all the time, we just heard about the ones who got caught. Personally I would never do it as I can make much more by keeping my job and the field I’m in is all about ethics and integrity. I would rather hustle with contracting or job shop to get a raise if I really needed the money.
- asdfasgasdgasdg 5y ago
  People who are in an insider position at a publicly traded company are generally getting compensated well enough that they do not need any more. They may want more but most folks get by with much less.
  - voakbasda 5y ago
    In the US, all it takes is a run in with the legal system or emergency medical bills, and virtually anyone could find themselves in dire financial straights.
    - asdfasgasdgasdg 5y ago
      Most of the time these stories are reported, there is no indication that the motivation is paying back medical debts. Actually I've never seen it. It's normally gambling or drugs. I agree an insider with medical debt is a theoretical problem, but it doesn't seem to be an actually common occurrence.

kenrose 5y ago

> Does anyone have a solution for lowering that temptation and making these scenarios less likely? Isn't the status quo doing a sufficient job? The temptation may be there, but it's abated by the downside risk of fines, prison time, and unemployability.

deleted 5y ago

[deleted]

jwsteigerwalt 5y ago

There is no solution better than the current ones. After a company I worked with was acquired by a public company, I was given a role that included accessing to sensitive information in financial dbs. Along with that was a welcome email from the chief counsel, then every quarter came emails listing blackout dates. I nave traded in the company’s stock or options, but it would have been incredibly clear when I was prevented from doing so.

lostcolony 5y ago
Some companies will also work with the financial group they administer their equity and ESPP through, so you literally -can't- trade on certain dates. You probably shouldn't be buying company stock outside of those anyway, given the limited trading windows, the scrutiny, and the lack of diversification.

KerryJones 5y ago

This reminds me of the problem before we had the cash register (which Charlie Munger has talked about quite a lot). It was a constant problem, most people companies had a lot of theft. The constant ease of access was just too much for most people to do, adding in a cash register reduced this theft by a lot. It's unlikely these were "bad people" by most definitions, undisciplined, perhaps they meant to repay it, perhaps they had a serious ill. We need a modern day equivalent of a cash register.