9 ms·

Insider trader had all the answers

148 points by ioblomov 2y ago

talkingtab 2y ago
[flagged]
- TeaBrain 2y ago
  That is a single article. Are we really supposed to call into question the entire credibility of the past and present of a news organization because of a single questionable article from years ago? Bloomberg is great at breaking financial news faster than any of the other financial news orgs. That one article you linked wasn't even their specialty like this post's article is.
- aidenn0 2y ago
  TFA is from the "opinion" section; I'm very confident that the article is at least somewhat reflective of Matt Levine's opinions.
- copypasterepeat 2y ago
  I'd say that Matt Levine has a fair amount of credibility. He's probably my favorite finance columnist.
sfblah 2y ago
Unpopular opinion, but I suspect this is actually how a lot of hedge funds have historically outperformed the markets. The amount of nonpublic data needed to get an edge is surprisingly small.
- genocidicbunny 2y ago
  I recall learning this lesson pretty early on. In high school, the econ teacher ran a stock trading game - you get some starting capital, you make trades, at the end of the quarter whoever had the most got some kind of reward. At the time we had a family friend that was working for a company about to announce a stock split along with a very good earnings report. He told me when to go all in on that stock, and i did exactly that. The day after that split my portfolio had more than doubled, beating the class record by a significant margin. Said record stood until the teacher retired. Not sure if it was the lesson he meant to impart though since I think most took away from it that to win you need to lie, cheat and steal.
  - OrigamiPastrami 2y ago
    > Not sure if it was the lesson he meant to impart though since I think most took away from it that to win you need to lie, cheat and steal. Better to teach reality than ideology, assuming you want to be a practitioner instead of a theorist.
    - Scene_Cast2 2y ago
      I like Margin Call's quote - "be first, be smarter, or cheat".
    - paulryanrogers 2y ago
      Nothing ever bad happened when societies trade high trust for low trust. No sir. All roses and sunshine. Certainly worthwhile for me to bend or break any rule keeping me from my best life.
      - OrigamiPastrami 2y ago
        Hating cheaters does nothing to change the reality of it being an effective method for getting ahead.
        paulryanrogers 2y ago
        Only in narrow circumstances and only to a point. Or at least that's my (limited) understanding of game theory.
        OrigamiPastrami 2y ago
        You're a caricature of my original point and you don't even realize it.
        paulryanrogers 2y ago
        IME the reality is that trust erodes as cheating becomes widespread. The consequences of less trust are significantly higher costs and more stress and fear. FWIW, I don't advocate blind trust. Perhaps you meant to say we should teach the reality that cheating exists and is bad; not to pretend it doesn't exist? Or that it's hopeless to be honest and trustworthy because some others may not be? Which leads to ... apathy or more cheating and less trust.
- avidiax 2y ago
  My mostly uninformed hunch is that much of the fancy "public information" analysis that hedge funds claim to do to have their edge is actually parallel construction for insider tips. I've heard it claimed that some funds have flown helicopters over oil storage fields to measure the shadows in the tanks to know how much oil is stored, or bought satellite photos to analyze the parking lot use of major retailers during the Christmas season. These things sound way too specific to just perform on a hunch, and even then, you might get the analysis wrong if you don't have the insider tip to check your math. But it's probably enough to keep the SEC investigator from having a case unless they find the insider link directly.
  - throwup238 2y ago
    > I've heard it claimed that some funds have flown helicopters over oil storage fields to measure the shadows in the tanks to know how much oil is stored, or bought satellite photos to analyze the parking lot use of major retailers during the Christmas season. This is really common and basically table stakes for sophisticated firms now (those that invest in relevant sectors). They track everything from parking lots to freighters and oil tankers to crop yields via satellite imagery and flyovers. It's gotten cheaper with drones so more important areas like major ports might get daily fly bys to track containers and boat traffic. Some have static cameras pointed at these things
    - Loughla 2y ago
      The only thing I can speak to is crop yields. Satellite imagery S flyovers won't really teach you a lot outside of a binary yes/no r field is alive. The technology farmers use teams yields to the square foot. I'm betting you can buy that from John Deere and others. That's probably where they get that?
      - throwup238 2y ago
        I don't know how effective the project was because I left before it finished but we were working on using the normalized difference vegetation index, normalized difference water index, and a bunch of other data points to try to predict crop yields. Farmers might get that kind of stuff from flyovers for the extra resolution but that was cost prohibitive for our purposes except when validating data from the satellites.
- interroboink 2y ago
  There is the fun example of a trade that was made before that information should have been physically able to arrive, based on speed-of-light limits. [1] (2013) The article says "Presumably there will be a hard look into what exactly happened..." but I wonder how hard that look was, and how often that stuff still happens. [1] https://www.washingtonpost.com/news/wonk/wp/2013/09/24/traders-may-have-gotten-last-weeks-fed-news-7-milliseconds-early/ https://www.washingtonpost.com/news/wonk/wp/2013/09/24/trade...
  - ttyprintk 2y ago
    The regulators looking at gold futures would have been contending with manipulators placing massive orders in bad faith, trying to trigger stop loss. That all led up to the flash crash.
- halfcat 2y ago
  I would take the idea further, that profitable retail traders are profitable, in large part, because corruption exists. Not that they are engaged in corruption, but that any patterns they find primarily exist only as a result of the corruption of others. It’s a working hypothesis at least.
  - datavirtue 2y ago
    I think it's the market makers and algorithmic traders. Not sure if they are corrupt. When things get famous the retail traders come in and the algos drop off and then the market makers start futzing over the arbitrage.
- m3kw9 2y ago
  in the form of nudge nudge wink wink
- blackeyeblitzar 2y ago
  My guess is they also make use of “expert networks” to access confidential information.
  - datavirtue 2y ago
    Anyone can pay for that. The problem is being able to read and digest it all.
- lumost 2y ago
  Also pretty easy to hide in the noise of a trading algorithm. Eg. Make bets that hold a collection of biotech firms on the day that the fda approves their treatment. You could also up the exposure by choosing to hold N small market segments, that all overlap with the stock that’s being insider traded.
- ants_everywhere 2y ago
  One thing I rarely hear people talk about is how many libertarians believe insider trading shouldn't be a crime. There are lots of libertarians in the financial industry, so there are likely lots of people in the financial industry who believe that laws against insider trading are evil. So when I picture insider traders, I don't picture shady organized criminals doing things they know are bad. I picture cowbows believing themselves to be the good guys for freedomizing the market. And when you think about all the people who believe that insider trading is a positive good, you kind of have to conclude that it's rampant. It's financially lucrative, hard to detect, harder to prove, relatively easy to hide, relatively easy to pin on someone below you in the org, and people think they're good for doing it. What force is keeping it in check?
  - TacticalCoder 2y ago
    [flagged]
    - ants_everywhere 2y ago
      I'm sorry I hurt your feelings. > there are hardly any libertarians There are tons of libertarians in the US. If you're in Luxembourg (judging from your profile?) you may have fewer of them. There was a big push in the 70s. Most of the ones I've known well grew up in the 70s and read more or less the same literature. The had some influence in econ in the 70s and 80s and their influence is less mainstream now, so you may have fewer younger ones. There are still lots of them in tech, especially in the bay area. Perhaps they still skew older, I don't know much about the demographics these days. It's partially an American phenomenon because of the cold war and because it became a way for conservatives to --racism and ++drugs. Nowadays you don't need a third party for that. > May I have some of what you're smoking? - https://www.cato.org/commentary/its-time-legalize-insider-trading https://www.cato.org/commentary/its-time-legalize-insider-tr... - https://mises.org/articles-interest/what-morally-right-insider-trading https://mises.org/articles-interest/what-morally-right-insid... - https://www.investopedia.com/articles/markets-economy/092216/why-insider-trading-bad-financial-markets.asp https://www.investopedia.com/articles/markets-economy/092216... - https://www.reddit.com/r/changemyview/comments/2v3ikz/cmv_insider_trading_should_be_legal/ https://www.reddit.com/r/changemyview/comments/2v3ikz/cmv_in... - https://politics.stackexchange.com/a/20426 https://politics.stackexchange.com/a/20426 - https://www.pbs.org/wgbh/frontline/article/should-insider-trading-be-legal/ https://www.pbs.org/wgbh/frontline/article/should-insider-tr... Plus many more. Google around for "insider trading" plus some of the standard libertarian economics keywords like "coasian" or "austrian" and you can find some of the literature. I haven't tried smoking any of it, though, and can't advise it.
- maga_2020 2y ago
  Not just hedge funds. Congressional democrats, and i am sure republicans too can outperform S&P 500 -- >" An exchange-traded fund (ETF) that tracks the stock trades of Democratic members of Congress has been outperforming the S&P 500 since its launch in 2023. " https://markets.businessinsider.com/news/etf/etf-named-after-nancy-pelosi-tracking-congressional-democrats-stock-trades-surpasses-s-p-500-with-tech-triumph-1033116562 https://markets.businessinsider.com/news/etf/etf-named-after...
  - chewz 2y ago
    Hillary Clinton cattle futures controversy - Wikipedia https://en.wikipedia.org/wiki/Hillary_Clinton_cattle_futures_controversy https://en.wikipedia.org/wiki/Hillary_Clinton_cattle_futures... ETF Named After Nancy Pelosi, Tracking Congressional Democrats' Stock Trades, Surpasses S&P 500 with Tech Triumph | Markets Insider https://markets.businessinsider.com/news/etf/etf-named-after-nancy-pelosi-tracking-congressional-democrats-stock-trades-surpasses-s-p-500-with-tech-triumph-1033116562?op=1 https://markets.businessinsider.com/news/etf/etf-named-after...
    - bobmcnamara 2y ago
      Sssh, we don't speak of the chicken man's chicken monies.
- branko_d 2y ago
  > hedge funds have historically outperformed the markets According to Investopedia: "From January 1994 to June 2023—through both bull and bear markets—the passive S&P 500 Index outperformed every major hedge fund strategy by over 2.8 percentage points in annualized return." https://www.investopedia.com/articles/03/121003.asp https://www.investopedia.com/articles/03/121003.asp
  - ttyprintk 2y ago
    Good article. The grandparent comment is about hedge funds that outperform. Rather than offering the automatic diversification most people seek from hedge funds, his/her point is that some which are highly correlated to the market are laundering insider info.
- rqtwteye 2y ago
  That’s what some guys I knew in New York told me. People talk to each other and the hedge fund guys don’t really compete with each other.
- jjallen 2y ago
  Like which ones do you suspect have done this? Many funds do not use these sorts of strategies and the ones that do almost always underperform after fees. So in aggregate there isn’t much evidence of outperformance.
- deleted 2y ago
  [deleted]
soniman 2y ago
Wouldn't it be easier to get mobile tracking info about M&A bankers and figure out which companies and websites they're visiting?
- chatmasta 2y ago
  What sort of “mobile tracking info” do you have in mind, and where could you obtain this information for an individual? Maybe (maybe!) you can get their physical location with the right access to certain ISP datasets, but the website info? Is that something that is available for sale on an individual basis? The article states that the trader obtained his information by hacking into poorly secured corporate email accounts and configuring auto-forwarding rules to send himself copies of incoming emails. Specifically, he triggered password reset flows with “security questions” and data mined open sources for metadata like family names which helped him guess the answers to the security questions. So overall, it wasn’t a very sophisticated hack, and certainly seems more straight forward than “getting the mobile tracking info of M&A bankers.”
  - soniman 2y ago
    Maybe "ad targeting info" is more accurate https://www.wired.com/story/how-pentagon-learned-targeted-ads-to-find-targets-and-vladimir-putin/ https://www.wired.com/story/how-pentagon-learned-targeted-ad...
  - tgsovlerkhgsel 2y ago
    In the US, there are commercial companies selling this data. Probably not associated with a name, but you could buy the data (I think they sell the whole dataset for a relatively affordable price), figure out who is a M&A lawyer by checking which IDs show up at their headquarters + some other relevant location, then track them from there going forward. The data is likely collected from ad and analytics SDKs in various unrelated apps, so you just need the lawyer to be using one of these apps. Journalists have demonstrated that the data is good enough to identify and track e.g. intelligence service employees.
- gruez 2y ago
  ...or track SEC agents instead https://www.bloomberg.com/opinion/articles/2024-09-11/hertz-bankruptcy-was-too-good-for-shareholders https://www.bloomberg.com/opinion/articles/2024-09-11/hertz-... https://archive.is/o/TTQ2A/https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4941708 https://archive.is/o/TTQ2A/https://papers.ssrn.com/sol3/pape...
throwaway984393 2y ago
[dead]
fijiaarone 2y ago
Strong scent of bovine effluence. In order to reset their email password he would’ve needed access to their email.
- wmf 2y ago
  No? If you're resetting your email password, it's probably because you're locked out of your email and thus the reset process shouldn't require email.
  - insidstwr 2y ago
    It should use 2fa and another email. For corporate just internal IT right? Security here seems lapse. Ideally reports are links to an internal system not attachments.
- tgsovlerkhgsel 2y ago
  Should have needed. I recommend listening to (or reading the transcript of) https://darknetdiaries.com/transcript/118/ https://darknetdiaries.com/transcript/118/ about someone doing account hijacking/password reset as a service. Even good services sometimes have zero-days.
- andrewaylett 2y ago
  Microsoft supports self-service password reset: https://learn.microsoft.com/en-us/entra/identity/authentication/tutorial-enable-sspr https://learn.microsoft.com/en-us/entra/identity/authenticat... "Microsoft Entra self-service password reset (SSPR) gives users the ability to change or reset their password, with no administrator or help desk involvement. If Microsoft Entra ID locks a user's account or they forget their password, they can follow prompts to unblock themselves and get back to work." Which isn't actually quite as crazy as it sounds like it should be.
jowea 2y ago
I can't remember seeing security questions securing a system in the last decade. Are they still used and I just don't see them or this was some unusual company config?
- throw16180339 2y ago
  USPS uses them. Their customer service rep wasn't amused when I told her my favorite food is heroin.
  - nkrisc 2y ago
    And here I am with all answers to my security questions as random strings of letters and numbers stored alongside my password in my password manager. I hope I don’t have to give someone that answer over the phone.
    - oefrha 2y ago
      I probably raised a fair bit of suspicion last week when I told the Wells Fargo rep handling a declined CC transaction that I had to look up my mother’s maiden name in my password manager.
      - bee_rider 2y ago
        At this point anyone handling passwords must have encountered enough of us to know that some family names need to be looked up in a password manager, and it isn’t that suspicious. Isn’t that right, my cousin? I can never remember how to spell grandma 38!;&,90-@3!;8,’s name.
        SoftTalker 2y ago
        I don't remember where now, but I have run into sites that disallow numbers and non-alpha characters in the "secret" question answers. They were actively trying to thwart people from entering random gibberish there. Of course that's silly, but so is thinking that a person's maiden name is some kind of secret, or that people will be able to reliably remember things like "the title of their favorite book."
metadat 2y ago
https://archive.today/UqYa9 https://archive.today/UqYa9
ta988 2y ago
The supreme court, and its now usual right leaning bias neutered the SEC a bit more: https://www.whitecase.com/insight-alert/supreme-court-rules-sec-use-house-tribunals-unconstitutional-potentially-far-reaching https://www.whitecase.com/insight-alert/supreme-court-rules-...
- verisimi 2y ago
  Are SEC the good guys? I can't keep up.
  - bboygravity 2y ago
    No, they're not. Should have been quite clear when Madoff ran a 20 billion USD ponzi for multiple decades and he got caught because his own sons turned him in at the FBI. The SEC was not involved in Madoff at all (other than to make it worse my "auditing" Madoff multiple times and publishing that "all is fine nothing to see here"). The SEC is a government marketing agency to keep up the veil of US markets being fair and functional.
    - Hnrobert42 2y ago
      They can be incompetent without being bad. It is a mistake to assume nefarious intent.
      - WrongAssumption 2y ago
        You don’t have to be nefarious to be bad. Being incompetent definitely makes an federal agency with powers of enforcement bad.
      - tbrownaw 2y ago
        "Bad" can also apply to results or execution (performance, in/competence), not just intent.
  - trompetenaccoun 2y ago
    Gensler met with FTX fraudster Sam Bankman-Fried and had a secret zoom call with him as the press later found out. FTX always advertised how they were "regulated". Yet despite not even having proper book-keeping¹, they were never investigated by the SEC, which has been focused on hassling legitimate businesses such as Coinbase - a public company with proper compliance and actual audits. ¹ https://arstechnica.com/tech-policy/2022/11/new-ftx-chief-slams-complete-failure-of-corporate-controls-at-crypto-exchange https://arstechnica.com/tech-policy/2022/11/new-ftx-chief-sl...
silexia 2y ago
Anyone else read all the way down and see the bit about "everything is securities fraud"? Great ongoing bit by Matt on another way attorneys in the US bilk the public.
- wpietri 2y ago
  I don't think that's bilking at all. In the US we generally favor private enforcement over public regulation. E.g., the SEC doesn't go after every small bit of fraud and dubious corporate behavior. They're the big guns, and the small stuff is dealt with via private lawsuit from investors who think they've been harmed. If we got rid of both private and public enforcement, fraud costs would balloon massively, costing the public wildly more. First for retail investors they were ever more often the suckers in the fraud, and then for everybody as we lose the robust public markets that are a major driver of business investment. Somebody's got to keep the greedy, amoral people in line. I'm not sure doing it via predatory lawyers is more efficient than skilled bureaucrats, but it's definitely more in line with the free market principles that tend to win out in the US.
  - silexia 2y ago
    I agree with private enforcement via the courts, but I disagree with securities fraud which is just highway robbery of the public and investors to enrich lawyers.
    - wpietri 2y ago
      It is on behalf of investors that suits are bought. And when money is paid, it happens when a judge decides investors are harmed.
michaelteter 2y ago
If you’re clever enough you to do something like this, then you must realize that getting caught is an obvious eventuality. So… why?
- wpietri 2y ago
  I don't think it's a question of raw intelligence so much as where the smarts are applied. Doing the crime and stepping back to put the crime in context and analyze the paths are two different topics and two different sets of behaviors. As an analogy, as a developer I think it's pretty easy to write code that's bad in some way that you don't notice at the time. And that's even true if you are able to spot the same code as bad when, say, joining a new job.
- jezzamon 2y ago
  Can't dig up the source but I remember hearing that it's often people that have an overly high value on having things immediately. E.g. thinking about the lifestyle they could live now with the money. They're acting irrationally from a long term perspective.
djfbnddn 2y ago
Well technically any website which has a ticker watchlist has valuable data because they can correlate it with the data about ticker detail page access patterns and infer something. Whether that is valuable is something else. But if you have the data on people in the industry then it might be valuable.
9cb14c1ec0 2y ago
Proof that security questions on websites are one of the most garbage "security" practices out there.
- pcurve 2y ago
  I'm probably sure everyone knows my first pet's name by now.
  - phs318u 2y ago
    My first dog t7xW6q+WX-i9$G4*&^sY was a beautiful creature. I remember her fondly.
- homarp 2y ago
  only if you tell the truth
  - 9cb14c1ec0 2y ago
    Most people do.
- phs318u 2y ago
  When forced to provide answers to dumb “security questions”, I will typically use a password manager to both generate a random “answer” and to store the question-answer pairs. I generate new strings for each site that asks the same dumb question. For sites that demand to know my birthday when all they really need is a boolean declaration of adulthood I use 1 January 1901. (I’ll admit that when I first started this practice I used 1 April 1901).
darioatonal4 2y ago
[dead]
ioblomov 2y ago
https://archive.ph/uMNA7 https://archive.ph/uMNA7

148 points by ioblomov 2y ago

talkingtab 2y ago

[flagged]

TeaBrain 2y ago
That is a single article. Are we really supposed to call into question the entire credibility of the past and present of a news organization because of a single questionable article from years ago? Bloomberg is great at breaking financial news faster than any of the other financial news orgs. That one article you linked wasn't even their specialty like this post's article is.
aidenn0 2y ago
TFA is from the "opinion" section; I'm very confident that the article is at least somewhat reflective of Matt Levine's opinions.
copypasterepeat 2y ago
I'd say that Matt Levine has a fair amount of credibility. He's probably my favorite finance columnist.

sfblah 2y ago

Unpopular opinion, but I suspect this is actually how a lot of hedge funds have historically outperformed the markets. The amount of nonpublic data needed to get an edge is surprisingly small.

genocidicbunny 2y ago
I recall learning this lesson pretty early on. In high school, the econ teacher ran a stock trading game - you get some starting capital, you make trades, at the end of the quarter whoever had the most got some kind of reward. At the time we had a family friend that was working for a company about to announce a stock split along with a very good earnings report. He told me when to go all in on that stock, and i did exactly that. The day after that split my portfolio had more than doubled, beating the class record by a significant margin. Said record stood until the teacher retired. Not sure if it was the lesson he meant to impart though since I think most took away from it that to win you need to lie, cheat and steal.
- OrigamiPastrami 2y ago
  > Not sure if it was the lesson he meant to impart though since I think most took away from it that to win you need to lie, cheat and steal. Better to teach reality than ideology, assuming you want to be a practitioner instead of a theorist.
  - Scene_Cast2 2y ago
    I like Margin Call's quote - "be first, be smarter, or cheat".
  - paulryanrogers 2y ago
    Nothing ever bad happened when societies trade high trust for low trust. No sir. All roses and sunshine. Certainly worthwhile for me to bend or break any rule keeping me from my best life.
    - OrigamiPastrami 2y ago
      Hating cheaters does nothing to change the reality of it being an effective method for getting ahead.
      - paulryanrogers 2y ago
        Only in narrow circumstances and only to a point. Or at least that's my (limited) understanding of game theory.
        OrigamiPastrami 2y ago
        You're a caricature of my original point and you don't even realize it.
        paulryanrogers 2y ago
        IME the reality is that trust erodes as cheating becomes widespread. The consequences of less trust are significantly higher costs and more stress and fear. FWIW, I don't advocate blind trust. Perhaps you meant to say we should teach the reality that cheating exists and is bad; not to pretend it doesn't exist? Or that it's hopeless to be honest and trustworthy because some others may not be? Which leads to ... apathy or more cheating and less trust.
avidiax 2y ago
My mostly uninformed hunch is that much of the fancy "public information" analysis that hedge funds claim to do to have their edge is actually parallel construction for insider tips. I've heard it claimed that some funds have flown helicopters over oil storage fields to measure the shadows in the tanks to know how much oil is stored, or bought satellite photos to analyze the parking lot use of major retailers during the Christmas season. These things sound way too specific to just perform on a hunch, and even then, you might get the analysis wrong if you don't have the insider tip to check your math. But it's probably enough to keep the SEC investigator from having a case unless they find the insider link directly.
- throwup238 2y ago
  > I've heard it claimed that some funds have flown helicopters over oil storage fields to measure the shadows in the tanks to know how much oil is stored, or bought satellite photos to analyze the parking lot use of major retailers during the Christmas season. This is really common and basically table stakes for sophisticated firms now (those that invest in relevant sectors). They track everything from parking lots to freighters and oil tankers to crop yields via satellite imagery and flyovers. It's gotten cheaper with drones so more important areas like major ports might get daily fly bys to track containers and boat traffic. Some have static cameras pointed at these things
  - Loughla 2y ago
    The only thing I can speak to is crop yields. Satellite imagery S flyovers won't really teach you a lot outside of a binary yes/no r field is alive. The technology farmers use teams yields to the square foot. I'm betting you can buy that from John Deere and others. That's probably where they get that?
    - throwup238 2y ago
      I don't know how effective the project was because I left before it finished but we were working on using the normalized difference vegetation index, normalized difference water index, and a bunch of other data points to try to predict crop yields. Farmers might get that kind of stuff from flyovers for the extra resolution but that was cost prohibitive for our purposes except when validating data from the satellites.
interroboink 2y ago
There is the fun example of a trade that was made before that information should have been physically able to arrive, based on speed-of-light limits. [1] (2013) The article says "Presumably there will be a hard look into what exactly happened..." but I wonder how hard that look was, and how often that stuff still happens. [1] https://www.washingtonpost.com/news/wonk/wp/2013/09/24/traders-may-have-gotten-last-weeks-fed-news-7-milliseconds-early/ https://www.washingtonpost.com/news/wonk/wp/2013/09/24/trade...
- ttyprintk 2y ago
  The regulators looking at gold futures would have been contending with manipulators placing massive orders in bad faith, trying to trigger stop loss. That all led up to the flash crash.
halfcat 2y ago
I would take the idea further, that profitable retail traders are profitable, in large part, because corruption exists. Not that they are engaged in corruption, but that any patterns they find primarily exist only as a result of the corruption of others. It’s a working hypothesis at least.
- datavirtue 2y ago
  I think it's the market makers and algorithmic traders. Not sure if they are corrupt. When things get famous the retail traders come in and the algos drop off and then the market makers start futzing over the arbitrage.
m3kw9 2y ago
in the form of nudge nudge wink wink
blackeyeblitzar 2y ago
My guess is they also make use of “expert networks” to access confidential information.
- datavirtue 2y ago
  Anyone can pay for that. The problem is being able to read and digest it all.
lumost 2y ago
Also pretty easy to hide in the noise of a trading algorithm. Eg. Make bets that hold a collection of biotech firms on the day that the fda approves their treatment. You could also up the exposure by choosing to hold N small market segments, that all overlap with the stock that’s being insider traded.
ants_everywhere 2y ago
One thing I rarely hear people talk about is how many libertarians believe insider trading shouldn't be a crime. There are lots of libertarians in the financial industry, so there are likely lots of people in the financial industry who believe that laws against insider trading are evil. So when I picture insider traders, I don't picture shady organized criminals doing things they know are bad. I picture cowbows believing themselves to be the good guys for freedomizing the market. And when you think about all the people who believe that insider trading is a positive good, you kind of have to conclude that it's rampant. It's financially lucrative, hard to detect, harder to prove, relatively easy to hide, relatively easy to pin on someone below you in the org, and people think they're good for doing it. What force is keeping it in check?
- TacticalCoder 2y ago
  [flagged]
  - ants_everywhere 2y ago
    I'm sorry I hurt your feelings. > there are hardly any libertarians There are tons of libertarians in the US. If you're in Luxembourg (judging from your profile?) you may have fewer of them. There was a big push in the 70s. Most of the ones I've known well grew up in the 70s and read more or less the same literature. The had some influence in econ in the 70s and 80s and their influence is less mainstream now, so you may have fewer younger ones. There are still lots of them in tech, especially in the bay area. Perhaps they still skew older, I don't know much about the demographics these days. It's partially an American phenomenon because of the cold war and because it became a way for conservatives to --racism and ++drugs. Nowadays you don't need a third party for that. > May I have some of what you're smoking? - https://www.cato.org/commentary/its-time-legalize-insider-trading https://www.cato.org/commentary/its-time-legalize-insider-tr... - https://mises.org/articles-interest/what-morally-right-insider-trading https://mises.org/articles-interest/what-morally-right-insid... - https://www.investopedia.com/articles/markets-economy/092216/why-insider-trading-bad-financial-markets.asp https://www.investopedia.com/articles/markets-economy/092216... - https://www.reddit.com/r/changemyview/comments/2v3ikz/cmv_insider_trading_should_be_legal/ https://www.reddit.com/r/changemyview/comments/2v3ikz/cmv_in... - https://politics.stackexchange.com/a/20426 https://politics.stackexchange.com/a/20426 - https://www.pbs.org/wgbh/frontline/article/should-insider-trading-be-legal/ https://www.pbs.org/wgbh/frontline/article/should-insider-tr... Plus many more. Google around for "insider trading" plus some of the standard libertarian economics keywords like "coasian" or "austrian" and you can find some of the literature. I haven't tried smoking any of it, though, and can't advise it.
maga_2020 2y ago
Not just hedge funds. Congressional democrats, and i am sure republicans too can outperform S&P 500 -- >" An exchange-traded fund (ETF) that tracks the stock trades of Democratic members of Congress has been outperforming the S&P 500 since its launch in 2023. " https://markets.businessinsider.com/news/etf/etf-named-after-nancy-pelosi-tracking-congressional-democrats-stock-trades-surpasses-s-p-500-with-tech-triumph-1033116562 https://markets.businessinsider.com/news/etf/etf-named-after...
- chewz 2y ago
  Hillary Clinton cattle futures controversy - Wikipedia https://en.wikipedia.org/wiki/Hillary_Clinton_cattle_futures_controversy https://en.wikipedia.org/wiki/Hillary_Clinton_cattle_futures... ETF Named After Nancy Pelosi, Tracking Congressional Democrats' Stock Trades, Surpasses S&P 500 with Tech Triumph | Markets Insider https://markets.businessinsider.com/news/etf/etf-named-after-nancy-pelosi-tracking-congressional-democrats-stock-trades-surpasses-s-p-500-with-tech-triumph-1033116562?op=1 https://markets.businessinsider.com/news/etf/etf-named-after...
  - bobmcnamara 2y ago
    Sssh, we don't speak of the chicken man's chicken monies.
branko_d 2y ago
> hedge funds have historically outperformed the markets According to Investopedia: "From January 1994 to June 2023—through both bull and bear markets—the passive S&P 500 Index outperformed every major hedge fund strategy by over 2.8 percentage points in annualized return." https://www.investopedia.com/articles/03/121003.asp https://www.investopedia.com/articles/03/121003.asp
- ttyprintk 2y ago
  Good article. The grandparent comment is about hedge funds that outperform. Rather than offering the automatic diversification most people seek from hedge funds, his/her point is that some which are highly correlated to the market are laundering insider info.
rqtwteye 2y ago
That’s what some guys I knew in New York told me. People talk to each other and the hedge fund guys don’t really compete with each other.
jjallen 2y ago
Like which ones do you suspect have done this? Many funds do not use these sorts of strategies and the ones that do almost always underperform after fees. So in aggregate there isn’t much evidence of outperformance.
deleted 2y ago
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soniman 2y ago

Wouldn't it be easier to get mobile tracking info about M&A bankers and figure out which companies and websites they're visiting?

chatmasta 2y ago
What sort of “mobile tracking info” do you have in mind, and where could you obtain this information for an individual? Maybe (maybe!) you can get their physical location with the right access to certain ISP datasets, but the website info? Is that something that is available for sale on an individual basis? The article states that the trader obtained his information by hacking into poorly secured corporate email accounts and configuring auto-forwarding rules to send himself copies of incoming emails. Specifically, he triggered password reset flows with “security questions” and data mined open sources for metadata like family names which helped him guess the answers to the security questions. So overall, it wasn’t a very sophisticated hack, and certainly seems more straight forward than “getting the mobile tracking info of M&A bankers.”
- soniman 2y ago
  Maybe "ad targeting info" is more accurate https://www.wired.com/story/how-pentagon-learned-targeted-ads-to-find-targets-and-vladimir-putin/ https://www.wired.com/story/how-pentagon-learned-targeted-ad...
- tgsovlerkhgsel 2y ago
  In the US, there are commercial companies selling this data. Probably not associated with a name, but you could buy the data (I think they sell the whole dataset for a relatively affordable price), figure out who is a M&A lawyer by checking which IDs show up at their headquarters + some other relevant location, then track them from there going forward. The data is likely collected from ad and analytics SDKs in various unrelated apps, so you just need the lawyer to be using one of these apps. Journalists have demonstrated that the data is good enough to identify and track e.g. intelligence service employees.
gruez 2y ago
...or track SEC agents instead https://www.bloomberg.com/opinion/articles/2024-09-11/hertz-bankruptcy-was-too-good-for-shareholders https://www.bloomberg.com/opinion/articles/2024-09-11/hertz-... https://archive.is/o/TTQ2A/https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4941708 https://archive.is/o/TTQ2A/https://papers.ssrn.com/sol3/pape...

throwaway984393 2y ago

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fijiaarone 2y ago

Strong scent of bovine effluence. In order to reset their email password he would’ve needed access to their email.

wmf 2y ago
No? If you're resetting your email password, it's probably because you're locked out of your email and thus the reset process shouldn't require email.
- insidstwr 2y ago
  It should use 2fa and another email. For corporate just internal IT right? Security here seems lapse. Ideally reports are links to an internal system not attachments.
tgsovlerkhgsel 2y ago
Should have needed. I recommend listening to (or reading the transcript of) https://darknetdiaries.com/transcript/118/ https://darknetdiaries.com/transcript/118/ about someone doing account hijacking/password reset as a service. Even good services sometimes have zero-days.
andrewaylett 2y ago
Microsoft supports self-service password reset: https://learn.microsoft.com/en-us/entra/identity/authentication/tutorial-enable-sspr https://learn.microsoft.com/en-us/entra/identity/authenticat... "Microsoft Entra self-service password reset (SSPR) gives users the ability to change or reset their password, with no administrator or help desk involvement. If Microsoft Entra ID locks a user's account or they forget their password, they can follow prompts to unblock themselves and get back to work." Which isn't actually quite as crazy as it sounds like it should be.

jowea 2y ago

I can't remember seeing security questions securing a system in the last decade. Are they still used and I just don't see them or this was some unusual company config?

throw16180339 2y ago
USPS uses them. Their customer service rep wasn't amused when I told her my favorite food is heroin.
- nkrisc 2y ago
  And here I am with all answers to my security questions as random strings of letters and numbers stored alongside my password in my password manager. I hope I don’t have to give someone that answer over the phone.
  - oefrha 2y ago
    I probably raised a fair bit of suspicion last week when I told the Wells Fargo rep handling a declined CC transaction that I had to look up my mother’s maiden name in my password manager.
    - bee_rider 2y ago
      At this point anyone handling passwords must have encountered enough of us to know that some family names need to be looked up in a password manager, and it isn’t that suspicious. Isn’t that right, my cousin? I can never remember how to spell grandma 38!;&,90-@3!;8,’s name.
      - SoftTalker 2y ago
        I don't remember where now, but I have run into sites that disallow numbers and non-alpha characters in the "secret" question answers. They were actively trying to thwart people from entering random gibberish there. Of course that's silly, but so is thinking that a person's maiden name is some kind of secret, or that people will be able to reliably remember things like "the title of their favorite book."

metadat 2y ago

https://archive.today/UqYa9 https://archive.today/UqYa9

ta988 2y ago

The supreme court, and its now usual right leaning bias neutered the SEC a bit more: https://www.whitecase.com/insight-alert/supreme-court-rules-sec-use-house-tribunals-unconstitutional-potentially-far-reaching https://www.whitecase.com/insight-alert/supreme-court-rules-...

verisimi 2y ago
Are SEC the good guys? I can't keep up.
- bboygravity 2y ago
  No, they're not. Should have been quite clear when Madoff ran a 20 billion USD ponzi for multiple decades and he got caught because his own sons turned him in at the FBI. The SEC was not involved in Madoff at all (other than to make it worse my "auditing" Madoff multiple times and publishing that "all is fine nothing to see here"). The SEC is a government marketing agency to keep up the veil of US markets being fair and functional.
  - Hnrobert42 2y ago
    They can be incompetent without being bad. It is a mistake to assume nefarious intent.
    - WrongAssumption 2y ago
      You don’t have to be nefarious to be bad. Being incompetent definitely makes an federal agency with powers of enforcement bad.
    - tbrownaw 2y ago
      "Bad" can also apply to results or execution (performance, in/competence), not just intent.
- trompetenaccoun 2y ago
  Gensler met with FTX fraudster Sam Bankman-Fried and had a secret zoom call with him as the press later found out. FTX always advertised how they were "regulated". Yet despite not even having proper book-keeping¹, they were never investigated by the SEC, which has been focused on hassling legitimate businesses such as Coinbase - a public company with proper compliance and actual audits. ¹ https://arstechnica.com/tech-policy/2022/11/new-ftx-chief-slams-complete-failure-of-corporate-controls-at-crypto-exchange https://arstechnica.com/tech-policy/2022/11/new-ftx-chief-sl...

silexia 2y ago

Anyone else read all the way down and see the bit about "everything is securities fraud"? Great ongoing bit by Matt on another way attorneys in the US bilk the public.

wpietri 2y ago
I don't think that's bilking at all. In the US we generally favor private enforcement over public regulation. E.g., the SEC doesn't go after every small bit of fraud and dubious corporate behavior. They're the big guns, and the small stuff is dealt with via private lawsuit from investors who think they've been harmed. If we got rid of both private and public enforcement, fraud costs would balloon massively, costing the public wildly more. First for retail investors they were ever more often the suckers in the fraud, and then for everybody as we lose the robust public markets that are a major driver of business investment. Somebody's got to keep the greedy, amoral people in line. I'm not sure doing it via predatory lawyers is more efficient than skilled bureaucrats, but it's definitely more in line with the free market principles that tend to win out in the US.
- silexia 2y ago
  I agree with private enforcement via the courts, but I disagree with securities fraud which is just highway robbery of the public and investors to enrich lawyers.
  - wpietri 2y ago
    It is on behalf of investors that suits are bought. And when money is paid, it happens when a judge decides investors are harmed.

michaelteter 2y ago

If you’re clever enough you to do something like this, then you must realize that getting caught is an obvious eventuality. So… why?

wpietri 2y ago
I don't think it's a question of raw intelligence so much as where the smarts are applied. Doing the crime and stepping back to put the crime in context and analyze the paths are two different topics and two different sets of behaviors. As an analogy, as a developer I think it's pretty easy to write code that's bad in some way that you don't notice at the time. And that's even true if you are able to spot the same code as bad when, say, joining a new job.
jezzamon 2y ago
Can't dig up the source but I remember hearing that it's often people that have an overly high value on having things immediately. E.g. thinking about the lifestyle they could live now with the money. They're acting irrationally from a long term perspective.

djfbnddn 2y ago

Well technically any website which has a ticker watchlist has valuable data because they can correlate it with the data about ticker detail page access patterns and infer something. Whether that is valuable is something else. But if you have the data on people in the industry then it might be valuable.

9cb14c1ec0 2y ago

Proof that security questions on websites are one of the most garbage "security" practices out there.

pcurve 2y ago
I'm probably sure everyone knows my first pet's name by now.
- phs318u 2y ago
  My first dog t7xW6q+WX-i9$G4*&^sY was a beautiful creature. I remember her fondly.
homarp 2y ago
only if you tell the truth
- 9cb14c1ec0 2y ago
  Most people do.
phs318u 2y ago
When forced to provide answers to dumb “security questions”, I will typically use a password manager to both generate a random “answer” and to store the question-answer pairs. I generate new strings for each site that asks the same dumb question. For sites that demand to know my birthday when all they really need is a boolean declaration of adulthood I use 1 January 1901. (I’ll admit that when I first started this practice I used 1 April 1901).

darioatonal4 2y ago

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ioblomov 2y ago

https://archive.ph/uMNA7 https://archive.ph/uMNA7