4 ms·

Or did he have insider information that allowed him to act early?

by chank 4y ago

mannerheim 4y ago
https://twitter.com/RagingVentures/status/1615826088038473733 https://twitter.com/RagingVentures/status/161582608803847373...
- windexh8er 4y ago
  There is a lot of concern around SVB within the 90 days leading up to the event. But the timing is interesting. The day before? And the CEO dumping stock? The difference here is likely insider information. It's obvious Mr. Thiel is well connected and so it's not likely he made this decision uniformed beyond the normal flow of chatter. The question is if he was tipped off and had insider information is that even illegal in this context?
  - gruez 4y ago
    >And the CEO dumping stock? Source? I feel like every time this gets brought up, it turns out that it was part of a rule 10b5-1 sale (ie. it was scheduled months/years in advance), because if you actually thought the company was going to go under pretty soon, dumping stock will look so suspicious.
    - windexh8er 4y ago
      That's, ultimately, a loophole many CEOs use. They have to preschedule the sale of stock so it's not insider trading. However they can cancel those trades. At least that's how it was the last time I checked. I was told this by a large, prominent, network security organization CEO years ago. Basically, from this [0] article: "This general prohibition addresses a significant loophole in the current Rule 10b5-1, which permits insiders to adopt multiple trading plans and selectively cancel certain plans based on material nonpublic information." So it looks like 10b5-1 was supposed to change. But I'm not aware that it did. Regardless 10b5-1 was just a cover so they couldn't be prosecuted for insider trading as it was operating. [0] https://www.reuters.com/legal/legalindustry/secs-run-revamping-rule-10b5-1-deter-insider-trading-2023-01-26/ https://www.reuters.com/legal/legalindustry/secs-run-revampi...
      - gruez 4y ago
        But is there evidence that the CEO was abusing this loophole? For instance, a string of cancellations in the months/quarters leading up to it?
        windexh8er 4y ago
        It really doesn't matter. He had insider information that this was about to happen. He should have cancelled the trades knowing what he knew. See the loophole is this only works one way: in favor of the CEO.
        windexh8er 4y ago
        And just as an aside - keep in mind Greg Becker was not only the CEO of SVB, but also on the Federal Reserve Bank of San Francisco [0]. It also appears he very well knew the loophole he was abusing [1]: "Silicon Valley Bank Chief Executive Officer Greg Becker sold $3.6 million of company stock under a trading plan less than two weeks before the firm disclosed extensive losses that led to its failure. The sale of 12,451 shares on Feb. 27 was the first time in more than a year that Becker had sold shares in parent company SVB Financial Group, according to regulatory filings. He filed the plan that allowed him to sell the shares on Jan. 26." ...and... "“While Becker may not have anticipated the bank run on Jan. 26 when he adopted the plan, the capital raise is material,” said Dan Taylor, a professor at the University of Pennsylvania’s Wharton School who studies corporate trading disclosures. “If they were in discussion for a capital raise at the time the plan was adopted, that is highly problematic.”" Apparently the new rules go into effect on April 1st. How convenient, and ironic. [0] https://news.bloomberglaw.com/bankruptcy-law/svb-ceo-no-longer-on-san-francisco-feds-board-after-bank-fails https://news.bloomberglaw.com/bankruptcy-law/svb-ceo-no-long... [1] https://www.bloomberg.com/news/articles/2023-03-10/svb-chief-sold-3-6-million-in-stock-days-before-bank-s-failure https://www.bloomberg.com/news/articles/2023-03-10/svb-chief...
collegeburner 4y ago
probably, he's well-connected. but withdrawing from a bank on insider info isn't illegal.
- chank 4y ago
  Not implying that it's illegal. Only that him being connected is the only reason he was able to get his money out beforehand.
blincoln 4y ago
I'm not a Thiel fan, but I see no reason to suspect insider information. Their stock was already down Wednesday night. Articles about SVB's conference call started showing up almost immediately it happened mid-day on Thursday.[1] I'm not much of a finance person, but the SVB CEO's comments[2] set off alarm bells for me as soon as I saw them on Thursday. Withdrawing their funds was the action that both short-term game theory and act-utilitarianism would point to,[3] so it seems like a no-brainer that Thiel would have his organization pull their funds immediately. If they saw transaction oddities as well, it's even more understandable. [1] e.g. https://techcrunch.com/2023/03/09/silicon-valley-banks-shares-are-tanking-as-a-mess-unfolds/ https://techcrunch.com/2023/03/09/silicon-valley-banks-share... [2] "If everybody is telling each other that SVB is in trouble, that will be a challenge.", "stay calm. That’s my ask.", etc. [3] I'm more of a rule-utilitarian/long view person myself, but it's a lot harder to use that approach in this kind of scenario.
- HervalFreire 4y ago
  [dead]

Or did he have insider information that allowed him to act early?

by chank 4y ago

Or did he have insider information that allowed him to act early?

https://twitter.com/RagingVentures/status/1615826088038473733 https://twitter.com/RagingVentures/status/161582608803847373...

windexh8er 4y ago
There is a lot of concern around SVB within the 90 days leading up to the event. But the timing is interesting. The day before? And the CEO dumping stock? The difference here is likely insider information. It's obvious Mr. Thiel is well connected and so it's not likely he made this decision uniformed beyond the normal flow of chatter. The question is if he was tipped off and had insider information is that even illegal in this context?
- gruez 4y ago
  >And the CEO dumping stock? Source? I feel like every time this gets brought up, it turns out that it was part of a rule 10b5-1 sale (ie. it was scheduled months/years in advance), because if you actually thought the company was going to go under pretty soon, dumping stock will look so suspicious.
  - windexh8er 4y ago
    That's, ultimately, a loophole many CEOs use. They have to preschedule the sale of stock so it's not insider trading. However they can cancel those trades. At least that's how it was the last time I checked. I was told this by a large, prominent, network security organization CEO years ago. Basically, from this [0] article: "This general prohibition addresses a significant loophole in the current Rule 10b5-1, which permits insiders to adopt multiple trading plans and selectively cancel certain plans based on material nonpublic information." So it looks like 10b5-1 was supposed to change. But I'm not aware that it did. Regardless 10b5-1 was just a cover so they couldn't be prosecuted for insider trading as it was operating. [0] https://www.reuters.com/legal/legalindustry/secs-run-revamping-rule-10b5-1-deter-insider-trading-2023-01-26/ https://www.reuters.com/legal/legalindustry/secs-run-revampi...
    - gruez 4y ago
      But is there evidence that the CEO was abusing this loophole? For instance, a string of cancellations in the months/quarters leading up to it?
      - windexh8er 4y ago
        It really doesn't matter. He had insider information that this was about to happen. He should have cancelled the trades knowing what he knew. See the loophole is this only works one way: in favor of the CEO.
        windexh8er 4y ago
        And just as an aside - keep in mind Greg Becker was not only the CEO of SVB, but also on the Federal Reserve Bank of San Francisco [0]. It also appears he very well knew the loophole he was abusing [1]: "Silicon Valley Bank Chief Executive Officer Greg Becker sold $3.6 million of company stock under a trading plan less than two weeks before the firm disclosed extensive losses that led to its failure. The sale of 12,451 shares on Feb. 27 was the first time in more than a year that Becker had sold shares in parent company SVB Financial Group, according to regulatory filings. He filed the plan that allowed him to sell the shares on Jan. 26." ...and... "“While Becker may not have anticipated the bank run on Jan. 26 when he adopted the plan, the capital raise is material,” said Dan Taylor, a professor at the University of Pennsylvania’s Wharton School who studies corporate trading disclosures. “If they were in discussion for a capital raise at the time the plan was adopted, that is highly problematic.”" Apparently the new rules go into effect on April 1st. How convenient, and ironic. [0] https://news.bloomberglaw.com/bankruptcy-law/svb-ceo-no-longer-on-san-francisco-feds-board-after-bank-fails https://news.bloomberglaw.com/bankruptcy-law/svb-ceo-no-long... [1] https://www.bloomberg.com/news/articles/2023-03-10/svb-chief-sold-3-6-million-in-stock-days-before-bank-s-failure https://www.bloomberg.com/news/articles/2023-03-10/svb-chief...

collegeburner 4y ago

probably, he's well-connected. but withdrawing from a bank on insider info isn't illegal.

chank 4y ago
Not implying that it's illegal. Only that him being connected is the only reason he was able to get his money out beforehand.

blincoln 4y ago

I'm not a Thiel fan, but I see no reason to suspect insider information. Their stock was already down Wednesday night. Articles about SVB's conference call started showing up almost immediately it happened mid-day on Thursday.[1] I'm not much of a finance person, but the SVB CEO's comments[2] set off alarm bells for me as soon as I saw them on Thursday. Withdrawing their funds was the action that both short-term game theory and act-utilitarianism would point to,[3] so it seems like a no-brainer that Thiel would have his organization pull their funds immediately. If they saw transaction oddities as well, it's even more understandable. [1] e.g. https://techcrunch.com/2023/03/09/silicon-valley-banks-shares-are-tanking-as-a-mess-unfolds/ https://techcrunch.com/2023/03/09/silicon-valley-banks-share... [2] "If everybody is telling each other that SVB is in trouble, that will be a challenge.", "stay calm. That’s my ask.", etc. [3] I'm more of a rule-utilitarian/long view person myself, but it's a lot harder to use that approach in this kind of scenario.

HervalFreire 4y ago
[dead]