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Is this insider trading according to the law? Nonpublic information isn't being used to trade public stocks; it's being used to trade assets that don't appear t

Is this insider trading according to the law? Nonpublic information isn't being used to trade public stocks; it's being used to trade assets that don't appear to be regulated securities.

anm89 5y ago
This was my question as well. Id assume its a grey area and that the sec could come after them if they wanted. Whether they would win is anorher story
soco 5y ago
It's not illegal but that's the very reason why some things got regulated in the first place.
matwood 5y ago
To add to what you're saying, forex explicitly does not have insider trading rules. The problem is it's treated as a general asset. It feels like there should already be rules in place to handle if, for example, an Amazon exec went and bought property around an area prior to Amazon announcing their new HQ.
- jchonphoenix 5y ago
  Insider trading on real estate is explicitly allowed by law.
- pardon_me 5y ago
  The world seems to run on "favors" of insider knowledge like this.
- dalbasal 5y ago
  Perhaps, though insider trading rules are pretty hard to enforce inside relatively confined and regulated realms. One solution is to go a step up the meta. Ban trading for certain groups or classes, like banning parliamentarians and government officials. ..but spouses, kids, friends and cousins make for a pretty substantial loophole. That said, not regulating against insider trading bleeds very quickly into market manipulation and corruption. Not sure what the ansers are. This is a very dirty part of the game game. Crypto brings in a new set of players, and it takes years before they'll learn to do this in a way that maintains a stable plausible legitimacy. We absolutely cannot have second tier people insider trading and rigging markets. It's antistabalizing.
  - andrewinardeer 5y ago
    Musk can move markets with a tweet. I doubt there is anything anyone can do about that. And he knows it. And I'm sure he benefits from it too.
- WHA8m 5y ago
  The question is, when is a coincident of making profit too big to actually be true. And I feel like this could be something that AI can be used for in the future. No human can overlook all the possibilities one could profit off insider information.
- alephnan 5y ago
  There were some Amazon couple speculating on real estate in Long Island City, Queens, NYC where Amazon was potentially opening an HQ. Amazon didn’t, and the coupled sued the condo. Trying to find the article.
  - mikepurvis 5y ago
    I don't see the lawsuit piece here, but definitely there was a bunch of speculation going on around that time: https://www.cnbc.com/2019/02/15/luxury-real-estate-agent-ryan-serhant-buyers-freaking-out-about-amazon-nyc-exit.html https://www.cnbc.com/2019/02/15/luxury-real-estate-agent-rya... I feel like this is less someone getting an unfair benefit and more just eager people experiencing at least part of what the regulatory framework is meant to protect them from— which is being taken to the cleaners on the basis of rumours that don't end up panning out.
chrisco255 5y ago
No, probably not. Nevermind that our own Congress regularly pulls this on us in the stock and real estate markets, insider trading happens all the time in various forms. The only difference here is that you can scan the chain for obvious forms of it.
H8crilA 5y ago
It is perfectly legal to trade non-securites based on insider information, for example real estate. Are these securities though? Wait, I think I heard that question before.
dogman144 5y ago
Because of this, there aren't laws for it as far as I know, only internal ethics docs. Might be more requirements for public companies, but still not the same as insider trading.
vmception 5y ago
no, its not. spot assets have no insider trading prohibition or sanction for trading in advance. equities (and some slight case law in the bond markets) have insider trading prohibitions attached, and futures have some newer anti fraud statutes tacked on to them by a different regulatory agency.
FabHK 5y ago
Point on insider trading law that the inimitable Matt Levine writes about frequently: The law is not about fairness, but about theft (of inside information). In particular, it is illegal to misappropriate someone else's information you come across to do insider trading for your own benefit. But it is not illegal for someone to use their own information to trade on. In this case, Coinbase published a list of coins that it might list. As I understand it, it would be illegal if some employee of Coinbase bought these coins prior to the release for his own account (thereby misappropriating the information). But if Coinbase bought them for their account, and then released the list, and then made money on the subsequent rise, that would be perfectly legal. See for example here: https://www.bloomberg.com/opinion/articles/2019-03-13/you-have-to-pay-the-right-person https://www.bloomberg.com/opinion/articles/2019-03-13/you-ha...
xiphias2 5y ago
They are regulated securities, just the SEC doesn't do anything about them. BTC is the only cryptocurrency where SEC has clearly stated that it's not a security. ETH is grey area. A lot of the altcoins / tokens are clearly securities.
MrMan 5y ago
before crypto there was a market phenomenon that I personally have no knowledge of but an acquaintance at a big bank which facilitated a lot of FX trading was very happy at one point that he was sent to Japan, where retail FX trading had become a huge fad, like crypto now. He was a prop trader for the bank and made a lot of his money going against retail traders. Presumably it was exploiting information asymmetries, partly, but probably also just simply harvesting fees and spreads. everything old is new again

Is this insider trading according to the law? Nonpublic information isn't being used to trade public stocks; it's being used to trade assets that don't appear to be regulated securities.

anm89 5y ago

This was my question as well. Id assume its a grey area and that the sec could come after them if they wanted. Whether they would win is anorher story

soco 5y ago

It's not illegal but that's the very reason why some things got regulated in the first place.

matwood 5y ago

To add to what you're saying, forex explicitly does not have insider trading rules. The problem is it's treated as a general asset. It feels like there should already be rules in place to handle if, for example, an Amazon exec went and bought property around an area prior to Amazon announcing their new HQ.

jchonphoenix 5y ago
Insider trading on real estate is explicitly allowed by law.
pardon_me 5y ago
The world seems to run on "favors" of insider knowledge like this.
dalbasal 5y ago
Perhaps, though insider trading rules are pretty hard to enforce inside relatively confined and regulated realms. One solution is to go a step up the meta. Ban trading for certain groups or classes, like banning parliamentarians and government officials. ..but spouses, kids, friends and cousins make for a pretty substantial loophole. That said, not regulating against insider trading bleeds very quickly into market manipulation and corruption. Not sure what the ansers are. This is a very dirty part of the game game. Crypto brings in a new set of players, and it takes years before they'll learn to do this in a way that maintains a stable plausible legitimacy. We absolutely cannot have second tier people insider trading and rigging markets. It's antistabalizing.
- andrewinardeer 5y ago
  Musk can move markets with a tweet. I doubt there is anything anyone can do about that. And he knows it. And I'm sure he benefits from it too.
WHA8m 5y ago
The question is, when is a coincident of making profit too big to actually be true. And I feel like this could be something that AI can be used for in the future. No human can overlook all the possibilities one could profit off insider information.
alephnan 5y ago
There were some Amazon couple speculating on real estate in Long Island City, Queens, NYC where Amazon was potentially opening an HQ. Amazon didn’t, and the coupled sued the condo. Trying to find the article.
- mikepurvis 5y ago
  I don't see the lawsuit piece here, but definitely there was a bunch of speculation going on around that time: https://www.cnbc.com/2019/02/15/luxury-real-estate-agent-ryan-serhant-buyers-freaking-out-about-amazon-nyc-exit.html https://www.cnbc.com/2019/02/15/luxury-real-estate-agent-rya... I feel like this is less someone getting an unfair benefit and more just eager people experiencing at least part of what the regulatory framework is meant to protect them from— which is being taken to the cleaners on the basis of rumours that don't end up panning out.

chrisco255 5y ago

No, probably not. Nevermind that our own Congress regularly pulls this on us in the stock and real estate markets, insider trading happens all the time in various forms. The only difference here is that you can scan the chain for obvious forms of it.

H8crilA 5y ago

It is perfectly legal to trade non-securites based on insider information, for example real estate. Are these securities though? Wait, I think I heard that question before.

dogman144 5y ago

Because of this, there aren't laws for it as far as I know, only internal ethics docs. Might be more requirements for public companies, but still not the same as insider trading.

vmception 5y ago

no, its not. spot assets have no insider trading prohibition or sanction for trading in advance. equities (and some slight case law in the bond markets) have insider trading prohibitions attached, and futures have some newer anti fraud statutes tacked on to them by a different regulatory agency.

FabHK 5y ago

Point on insider trading law that the inimitable Matt Levine writes about frequently: The law is not about fairness, but about theft (of inside information). In particular, it is illegal to misappropriate someone else's information you come across to do insider trading for your own benefit. But it is not illegal for someone to use their own information to trade on. In this case, Coinbase published a list of coins that it might list. As I understand it, it would be illegal if some employee of Coinbase bought these coins prior to the release for his own account (thereby misappropriating the information). But if Coinbase bought them for their account, and then released the list, and then made money on the subsequent rise, that would be perfectly legal. See for example here: https://www.bloomberg.com/opinion/articles/2019-03-13/you-have-to-pay-the-right-person https://www.bloomberg.com/opinion/articles/2019-03-13/you-ha...

xiphias2 5y ago

They are regulated securities, just the SEC doesn't do anything about them. BTC is the only cryptocurrency where SEC has clearly stated that it's not a security. ETH is grey area. A lot of the altcoins / tokens are clearly securities.

MrMan 5y ago

before crypto there was a market phenomenon that I personally have no knowledge of but an acquaintance at a big bank which facilitated a lot of FX trading was very happy at one point that he was sent to Japan, where retail FX trading had become a huge fad, like crypto now. He was a prop trader for the bank and made a lot of his money going against retail traders. Presumably it was exploiting information asymmetries, partly, but probably also just simply harvesting fees and spreads. everything old is new again