6 ms·

SEC Charges Three with Insider Trading Around Equifax Data Breach Announcement

131 points by gotmedium 4y ago

kyleblarson 4y ago
"The complaint also alleges that L. Palmer later reimbursed the client by check for the purchase cost of the options, scribbling in the check's memo line the words, "Blue Horseshoe," an apparent reference to the coded language used to convey inside information in the 1987 movie Wall Street." How can people be so idiotic?
- duxup 4y ago
  They thought it was over an had already gotten away with it. Not entirely like the main character at the end of that film when he is walking into the office … Maybe they never saw the ending?
  - bad416f1f5a2 4y ago
    An acquaintance of mine is a US Attorney. We got talking “crime and criminals” once and his comment stuck with me: essentially, all criminals have two full-time jobs. First, you have to advance your criminal enterprise. But second you have to not get caught. And just like your typical salaryman, criminals have off days, get lazy and phone it in, or get cocky and think they’re pulling one over on the boss. And all the while he has dozens of highly paid investigators with one job: to catch people slipping. Most importantly, while the criminal has to be perfect all the time, his investigators just have to be right just once.
    - jamiek88 4y ago
      Yep. Silk Road and Ross Ulbricht being the poster child for that. He made one early mistake. It having said that it was probably inevitable he’d make another one very few people have the temperament for proper opsec and what’s the point of being young, rich and powerful if you can’t enjoy the benefits?
- slig 4y ago
  >How can people be so idiotic? The non-idiotic don't get caught.
  - anonporridge 4y ago
    Why are all convicted criminals such idiots? Because law enforcement isn't competent enough to catch the intelligent criminals.
    - ClumsyPilot 4y ago
      the intelligent ones are running the show
      - euroderf 4y ago
        the intelligent ones use law enforcement to weed out their profession
- __derek__ 4y ago
  This has to be a new addition to Matt Levine's Rules of Insider Trading (i.e. don't refer to depictions of insider trading in popular media while insider trading). I'm really excited for the Money Stuff on this.
notch656a 4y ago
The SEC cannot bring criminal charges. Honestly it's a fucking joke, seems like it was worth it for them. They can just reshuffle their cash in some trusts or crypto or whatever and good luck getting it, they won't be behind bars.
- loeg 4y ago
  > The SEC claims that the illegal trading by L. Palmer's former client and J. Palmer's friend netted approximately $35,000 and $73,000 in profits, respectively, portions of which were shared with L. Palmer and J. Palmer according to their arrangements. > Additionally, the final judgment against L. Palmer would order him to disgorge $9,000 plus prejudgment interest of $2,026, and pay a civil penalty of $88,698. The final judgment against J. Palmer would order him to disgorge $28,000 plus prejudgment interest of $6,303, and pay a civil penalty of $73,399. The litigation as to Dishinger remains pending. In no sense was it "worth it for them."
  - Forgeties79 4y ago
    He’s clearly just grinding his axe about government. Probably not worth engaging him tbh.
    - notch656a 4y ago
      - eyelidlessness 4y ago
        I reached the same conclusion from your comment and afaik I’ve never encountered you before (and if I have it wasn’t very memorable, sorry bud)
        eyelidlessness 4y ago
        Can’t edit the comment now. To the person above, I’m easy to find and contact, feel free to avail yourself if you have something you want to say. That’s not an invitation for abuse, but I’m considerably more open minded to expressing and hearing strong emotions than I feel comfortable doing or expect to be kosher here. Have at it. As long as you’re not threatening me, I’ll read what you have to say.
rlt 4y ago
babyshake 4y ago
It seems uncommon for these types of charges to occur five years afterwards. Is there a reason it took so long?
- kevin_thibedeau 4y ago
  The SEC recently went on a four year hiatus. They're just now catching up.
  - junofan 4y ago
    That’s strange. I thought commissioners serve 5 year terms.
bob1029 4y ago
The part that keeps tripping these people up is involving even more real people in their crimes. Synthetic identity fraud is probably a better way to go about being a criminal if you insist on participating via the stock market. You don’t exactly need a supercomputer to correlate OTM options events for a single security. It’s way more traceable than most probably realize.
whoisjuan 4y ago
"The SEC claims that the illegal trading by L. Palmer's former client and J. Palmer's friend netted approximately $35,000 and $73,000 in profits"... The SEC here going for the big whales. /s
- gruez 4y ago
  If you know the whereabouts of those "big whales", feel free to report them here: https://www.sec.gov/tcr https://www.sec.gov/tcr There's money in it for you. A few months ago they awarded $17M to a whistleblower. https://www.sec.gov/news/press-release/2022-125 https://www.sec.gov/news/press-release/2022-125 Otherwise, making vague references to "big whales" doesn't really go anywhere.
  - TakeBlaster16 4y ago
    The Pelosis have been making headlines for insider trading lately. I wonder if reporting them would result in similarly proportionate fines. (Just kidding, I don't wonder.) https://nypost.com/2022/07/20/the-pelosis-trading-individual-stocks-must-stop/ https://nypost.com/2022/07/20/the-pelosis-trading-individual...
    - harry8 4y ago
      Come on now that's not really fair. It is totally legal for Nancy's husband to invest in companies and then for Nancy to push and kill laws that work in the financial interests of those companies. Even if you could prove Nancy was a total crook and the profit motive of that trading was driving her political dealings at the expense of the taxpayers, even with total documentary proof of it, it's not at all illegal. So calling insider trading isn't a legal definition at all. It's not illegal so it's fine is something of a mantra around here. But Trump is as crooked as he was weak and I honestly believe that too.
      - hermitdev 4y ago
        It doesn't have to be insider trading. It's blatant market manipulation, which is also illegal. And it also doesn't matter if it's her husband acting on it. I've spent most of my career working in finance. Neither my spouse, my children, my siblings, my parents, my grandparents, my friends, my barber, nor my bartender can act on inside information I was privy to that I may have uttered in their presence. The relation doesn't matter, the non public nature of the knowledge is what matters. That Pelosi not only has insider knowledge but the power the manipulate the market via legislation makes what she and her husband do that much more egregious. Same for any other congressional scum. They should be held to a higher standard than the plebes, not a lesser.
bmk44 4y ago
The penalty against normal everyday people like these people seems much stiffer than the penalties levied at sophisticated financial professionals. The traders operating hard-to-prove frauds with a "nod and a wink" approval from their supervisors at large banks and hedge funds always seem to be allowed to reap hundreds of millions of dollars in ill-gotten gains and if caught, give back only a tiny fraction of it, without even admitting guilt.
- bawolff 4y ago
  Are these really normal everday people?
- qzx_pierri 4y ago
  Do you have any sources for your claim? I realize this does happen, but I've always been interested in high profile examples of this (with proof).
- teawrecks 4y ago
  > give back only a tiny fraction of it, without even admitting guilt. a.k.a. their "cut" ;)
- gruez 4y ago
  >always seem to be allowed to reap hundreds of millions of dollars in ill-gotten gains and if caught, give back only a tiny fraction of it, without even admitting guilt. As per the SEC indictment, they earned $35k and $73k in ill gotten profits respectively, and were fined $99.7K and $79.9k. That's clearly more than "a tiny fraction"
  - phkahler 4y ago
    Exactly. This is the little guy punishment, not the big guy who get hundreds of millions of dollars.
  - olliej 4y ago
    Ok, if I steal a $300 TV, and get caught do I have the option to simply pay a $900 fine? Seriously, that's a heads I've made 30k, tails I lose some of my savings account. For people in this position that is all the penalty they received is. Worst case they extend their mortgage, which is already likely many times this fine and so the extension is of minimal impact. But also the people who commit fraud that takes out hundreds of millions of dollars (corporate collapses, etc) do make large amounts of money, and can plead poverty as a defense against full compensation. e.g. When Enron collapsed, few of the people responsible were jailed, and in fact were giving themselves bonuses mere days before it collapsed. So it lost people $45 billion directly attributable to fraud, and emptied its regular employee's 401ks and pension funds. The victims whose 401ks and pensions were emptied won all of $85 million of the $2 billion that was stolen, and investors got 11 billion. So they stole billions, repaid a quarter of that, and few actually went to jail. Of the fraction that were sent to jail I can't find evidence that they had to return any of the 700+ million in bonuses they received in the year leading up to the collapse, let alone the prior fraud based bonuses.
equifaxmayhem 4y ago
I worked for Equifax decades ago and the amount of scamming going on was impressive. People would take part time jobs just to alter their credit scores and histories in the system then quit or get fired. They would be found out BUT Equifax couldn’t change the info back for some reason. I never found out why not. I assume it’s because they’re incompetent!
olliej 4y ago
Huh, does that mean if I steal a $300 tv and get caught I just have to return the TV and pay a $600 fine? I didn't know that was an option. I thought that you had to go to jail or something like that?
rdxm 4y ago
fortran77 4y ago
Is there any decent human being who works for or with Equifax?

131 points by gotmedium 4y ago

"The complaint also alleges that L. Palmer later reimbursed the client by check for the purchase cost of the options, scribbling in the check's memo line the words, "Blue Horseshoe," an apparent reference to the coded language used to convey inside information in the 1987 movie Wall Street." How can people be so idiotic?

duxup 4y ago
They thought it was over an had already gotten away with it. Not entirely like the main character at the end of that film when he is walking into the office … Maybe they never saw the ending?
- bad416f1f5a2 4y ago
  An acquaintance of mine is a US Attorney. We got talking “crime and criminals” once and his comment stuck with me: essentially, all criminals have two full-time jobs. First, you have to advance your criminal enterprise. But second you have to not get caught. And just like your typical salaryman, criminals have off days, get lazy and phone it in, or get cocky and think they’re pulling one over on the boss. And all the while he has dozens of highly paid investigators with one job: to catch people slipping. Most importantly, while the criminal has to be perfect all the time, his investigators just have to be right just once.
  - jamiek88 4y ago
    Yep. Silk Road and Ross Ulbricht being the poster child for that. He made one early mistake. It having said that it was probably inevitable he’d make another one very few people have the temperament for proper opsec and what’s the point of being young, rich and powerful if you can’t enjoy the benefits?
slig 4y ago
>How can people be so idiotic? The non-idiotic don't get caught.
- anonporridge 4y ago
  Why are all convicted criminals such idiots? Because law enforcement isn't competent enough to catch the intelligent criminals.
  - ClumsyPilot 4y ago
    the intelligent ones are running the show
    - euroderf 4y ago
      the intelligent ones use law enforcement to weed out their profession
__derek__ 4y ago
This has to be a new addition to Matt Levine's Rules of Insider Trading (i.e. don't refer to depictions of insider trading in popular media while insider trading). I'm really excited for the Money Stuff on this.

notch656a 4y ago

The SEC cannot bring criminal charges. Honestly it's a fucking joke, seems like it was worth it for them. They can just reshuffle their cash in some trusts or crypto or whatever and good luck getting it, they won't be behind bars.

loeg 4y ago
> The SEC claims that the illegal trading by L. Palmer's former client and J. Palmer's friend netted approximately $35,000 and $73,000 in profits, respectively, portions of which were shared with L. Palmer and J. Palmer according to their arrangements. > Additionally, the final judgment against L. Palmer would order him to disgorge $9,000 plus prejudgment interest of $2,026, and pay a civil penalty of $88,698. The final judgment against J. Palmer would order him to disgorge $28,000 plus prejudgment interest of $6,303, and pay a civil penalty of $73,399. The litigation as to Dishinger remains pending. In no sense was it "worth it for them."
- Forgeties79 4y ago
  He’s clearly just grinding his axe about government. Probably not worth engaging him tbh.
  - notch656a 4y ago
    - eyelidlessness 4y ago
      I reached the same conclusion from your comment and afaik I’ve never encountered you before (and if I have it wasn’t very memorable, sorry bud)
      - eyelidlessness 4y ago
        Can’t edit the comment now. To the person above, I’m easy to find and contact, feel free to avail yourself if you have something you want to say. That’s not an invitation for abuse, but I’m considerably more open minded to expressing and hearing strong emotions than I feel comfortable doing or expect to be kosher here. Have at it. As long as you’re not threatening me, I’ll read what you have to say.

rlt 4y ago

babyshake 4y ago

It seems uncommon for these types of charges to occur five years afterwards. Is there a reason it took so long?

kevin_thibedeau 4y ago
The SEC recently went on a four year hiatus. They're just now catching up.
- junofan 4y ago
  That’s strange. I thought commissioners serve 5 year terms.

bob1029 4y ago

The part that keeps tripping these people up is involving even more real people in their crimes. Synthetic identity fraud is probably a better way to go about being a criminal if you insist on participating via the stock market. You don’t exactly need a supercomputer to correlate OTM options events for a single security. It’s way more traceable than most probably realize.

whoisjuan 4y ago

"The SEC claims that the illegal trading by L. Palmer's former client and J. Palmer's friend netted approximately $35,000 and $73,000 in profits"... The SEC here going for the big whales. /s

gruez 4y ago
If you know the whereabouts of those "big whales", feel free to report them here: https://www.sec.gov/tcr https://www.sec.gov/tcr There's money in it for you. A few months ago they awarded $17M to a whistleblower. https://www.sec.gov/news/press-release/2022-125 https://www.sec.gov/news/press-release/2022-125 Otherwise, making vague references to "big whales" doesn't really go anywhere.
- TakeBlaster16 4y ago
  The Pelosis have been making headlines for insider trading lately. I wonder if reporting them would result in similarly proportionate fines. (Just kidding, I don't wonder.) https://nypost.com/2022/07/20/the-pelosis-trading-individual-stocks-must-stop/ https://nypost.com/2022/07/20/the-pelosis-trading-individual...
  - harry8 4y ago
    Come on now that's not really fair. It is totally legal for Nancy's husband to invest in companies and then for Nancy to push and kill laws that work in the financial interests of those companies. Even if you could prove Nancy was a total crook and the profit motive of that trading was driving her political dealings at the expense of the taxpayers, even with total documentary proof of it, it's not at all illegal. So calling insider trading isn't a legal definition at all. It's not illegal so it's fine is something of a mantra around here. But Trump is as crooked as he was weak and I honestly believe that too.
    - hermitdev 4y ago
      It doesn't have to be insider trading. It's blatant market manipulation, which is also illegal. And it also doesn't matter if it's her husband acting on it. I've spent most of my career working in finance. Neither my spouse, my children, my siblings, my parents, my grandparents, my friends, my barber, nor my bartender can act on inside information I was privy to that I may have uttered in their presence. The relation doesn't matter, the non public nature of the knowledge is what matters. That Pelosi not only has insider knowledge but the power the manipulate the market via legislation makes what she and her husband do that much more egregious. Same for any other congressional scum. They should be held to a higher standard than the plebes, not a lesser.

bmk44 4y ago

The penalty against normal everyday people like these people seems much stiffer than the penalties levied at sophisticated financial professionals. The traders operating hard-to-prove frauds with a "nod and a wink" approval from their supervisors at large banks and hedge funds always seem to be allowed to reap hundreds of millions of dollars in ill-gotten gains and if caught, give back only a tiny fraction of it, without even admitting guilt.

bawolff 4y ago
Are these really normal everday people?
qzx_pierri 4y ago
Do you have any sources for your claim? I realize this does happen, but I've always been interested in high profile examples of this (with proof).
teawrecks 4y ago
> give back only a tiny fraction of it, without even admitting guilt. a.k.a. their "cut" ;)
gruez 4y ago
>always seem to be allowed to reap hundreds of millions of dollars in ill-gotten gains and if caught, give back only a tiny fraction of it, without even admitting guilt. As per the SEC indictment, they earned $35k and $73k in ill gotten profits respectively, and were fined $99.7K and $79.9k. That's clearly more than "a tiny fraction"
- phkahler 4y ago
  Exactly. This is the little guy punishment, not the big guy who get hundreds of millions of dollars.
- olliej 4y ago
  Ok, if I steal a $300 TV, and get caught do I have the option to simply pay a $900 fine? Seriously, that's a heads I've made 30k, tails I lose some of my savings account. For people in this position that is all the penalty they received is. Worst case they extend their mortgage, which is already likely many times this fine and so the extension is of minimal impact. But also the people who commit fraud that takes out hundreds of millions of dollars (corporate collapses, etc) do make large amounts of money, and can plead poverty as a defense against full compensation. e.g. When Enron collapsed, few of the people responsible were jailed, and in fact were giving themselves bonuses mere days before it collapsed. So it lost people $45 billion directly attributable to fraud, and emptied its regular employee's 401ks and pension funds. The victims whose 401ks and pensions were emptied won all of $85 million of the $2 billion that was stolen, and investors got 11 billion. So they stole billions, repaid a quarter of that, and few actually went to jail. Of the fraction that were sent to jail I can't find evidence that they had to return any of the 700+ million in bonuses they received in the year leading up to the collapse, let alone the prior fraud based bonuses.

equifaxmayhem 4y ago

I worked for Equifax decades ago and the amount of scamming going on was impressive. People would take part time jobs just to alter their credit scores and histories in the system then quit or get fired. They would be found out BUT Equifax couldn’t change the info back for some reason. I never found out why not. I assume it’s because they’re incompetent!

olliej 4y ago

Huh, does that mean if I steal a $300 tv and get caught I just have to return the TV and pay a $600 fine? I didn't know that was an option. I thought that you had to go to jail or something like that?

rdxm 4y ago

fortran77 4y ago

Is there any decent human being who works for or with Equifax?