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I don't find it hard to imagine. 1. Work for a company that provides signal-giving infrastructure for a variety of companies across disparate industries. Twili
by extr 5y ago
I don't find it hard to imagine.
1. Work for a company that provides signal-giving infrastructure for a variety of companies across disparate industries. Twilio is actually a perfect example.
2. Find someone to work with that already has or is willing to build a plausible history of so-so trades.
3. Occasionally tip this person off that company Y in industry X is about to have a good quarter. Never trade the same company twice. Parallel construct a plausible rationale for the trade based on public market signals if you want to sleep well at night.
4. Don't communicate over easily subpoenaed channels, obviously. The SEC isn't the NSA, basic OPSEC is fine.
5. Profit?
That's why I'm so disappointed by the OP! It's so easy to dream up a situation where they used their access in an effectively untraceable way.
- kasey_junk 5y agoThat provides extremely low edge for both parties involved. Your participant with a history of trades could just as easily do research using public information (company press release aggregation is a classic version) to get similar edge without entering a criminal conspiracy. Notice I mention high leverage. There are 2 challenges (as I see it) to committing insider trading. The first is having information ahead of time that actually predicts how the market will move based on the information. It’s not enough to know a company will have a good quarter you need to know it will be better than expected. Second you need to be able to make outsized returns on that information. You have to beat the market returns by themselves. This compounds with the other issue above. The less obviously market moving data you have the more leverage you need. This narrows the search space pretty considerably for an analytics based approach. You look at insiders with lots of access or anyone making high leverage bets. Finally, do a mental exercise on your step 2. What does that even look like? An insider randomly approaching hedge funds? A random encounter at a bar? A frat reunion where they share each other’s trading history like term papers?
- extr 5y agoI guess I'm imagining more of a situation where you are working with someone (or yourself) that already has a sophisticated understanding of the market's expectations, and you wait for opportunities where your inside info is not priced in well. Eg, a delivery app is expected to have another strong quarter of growth, but your data says that growth has stalled. However if I'm reading your point correctly, you're saying this is harder than it sounds. If you already have a "sophisticated" understanding of the market enough to make this work with low edge, why bother with a criminal conspiracy. And to make outsized returns, you need to use lots of leverage, in which case you're taking on more risk of exposure.
- refurb 5y agoHow do you get the profit into your hands? Cash? Bitcoin? Will this other person keep their mouth shut when the SEC comes knocking because some very successful traders seems to be handling a lot of cash or crypto? Or will they flip on you to stay out of prison? Read up on Matt Levine's many, many examples of people getting busted for insider trading.
- extr 5y agoNot sure how a random user of /r/WSB who has been receiving anonymous insider tips in return for 50% of the gains, to be paid in untraceable crypto, is going to "flip" :D
- refurb 5y agoCrypto is not untraceable. Crypto is useless unless converted into cash which requires identifying yourself. Said WSBer could just take your tips and keep all the money.
- extr 5y agoVery true. I find it to be a fun thought exercise though. Kind of like asking your friends around the dinner table how they would rob a bank.