3 ms·

Insiders who have locked up stocks but still want to sell could presumably just short the stock and take out a loan secured on the stock to get the financial ef

Insiders who have locked up stocks but still want to sell could presumably just short the stock and take out a loan secured on the stock to get the financial effects of selling, without actually selling... I wonder if that's what's happening with ~$1T of stocks currently locked up...

laluser 3mo ago
That’s almost always prohibited.
- meowkit 3mo ago
  Given the current administration’s recent market behavior I would not be shocked if people got away with exactly what OP described.
  - compiler-guy 3mo ago
    It's often prohibited by contract, not just law, so what the administration thinks is only part of the story.
    - godwinson__4-8 3mo ago
      Of course whether or not a contract is or is not enforceable as such is also a matter of law. As I understand, this IPO was unique for a variety of reasons. The fact unique terms are promulgated in a contract does not mean (at least in saner times) that they are automatically immune to regulatory scrutiny.
  - deleted 3mo ago
    [deleted]
tehlike 3mo ago
You don't "short the stock" by taking a loan secured by it.
dominotw 3mo ago
That would be a crime.
- Arodex 3mo ago
  https://en.wikipedia.org/wiki/List_of_people_granted_executive_clemency_in_the_second_Trump_presidency https://en.wikipedia.org/wiki/List_of_people_granted_executi...
stymaar 3mo ago
What happens if you get margin called in this scenario?
WarmWash 3mo ago
If anyone knows of a broker who will let you withdraw the proceeds (cash) of a short sale, I will buy the name of the broker off you. I'll also let you know why I would pay for this (although you may already know anyway, hah). I spent a week researching this talking to fidelity, schwab, IBKR, and Robinhood, none would allow it.
- icelancer 3mo ago
  I asked an adjacent question to a broker friend who flatly replied: "Not interested in being served a Wells Notice." Which more or less answered the question for me, even if he was being a bit hyperbolic.
- nutjob2 3mo ago
  Why would anyone let you do that? What's their incentive? I assume you're offering something as security for that money (shares?) but why would people complicate an already risky proposition further or go into the money lending business that they're not in?
jedberg 3mo ago
Insiders aren't allowed to short a stock. It's against the law.
- tonfa 3mo ago
  Against corporate policy, it's against the law only if they trade on material non public information. Once the lockup expire they'll be able to trade (sometimes there's trading window but some tech company don't have any for lower level employees), and they'll still be insiders.

laluser 3mo ago

That’s almost always prohibited.

meowkit 3mo ago
Given the current administration’s recent market behavior I would not be shocked if people got away with exactly what OP described.
- compiler-guy 3mo ago
  It's often prohibited by contract, not just law, so what the administration thinks is only part of the story.
  - godwinson__4-8 3mo ago
    Of course whether or not a contract is or is not enforceable as such is also a matter of law. As I understand, this IPO was unique for a variety of reasons. The fact unique terms are promulgated in a contract does not mean (at least in saner times) that they are automatically immune to regulatory scrutiny.
- deleted 3mo ago
  [deleted]

tehlike 3mo ago

You don't "short the stock" by taking a loan secured by it.

dominotw 3mo ago

That would be a crime.

Arodex 3mo ago
https://en.wikipedia.org/wiki/List_of_people_granted_executive_clemency_in_the_second_Trump_presidency https://en.wikipedia.org/wiki/List_of_people_granted_executi...

stymaar 3mo ago

What happens if you get margin called in this scenario?

WarmWash 3mo ago

If anyone knows of a broker who will let you withdraw the proceeds (cash) of a short sale, I will buy the name of the broker off you. I'll also let you know why I would pay for this (although you may already know anyway, hah). I spent a week researching this talking to fidelity, schwab, IBKR, and Robinhood, none would allow it.

icelancer 3mo ago
I asked an adjacent question to a broker friend who flatly replied: "Not interested in being served a Wells Notice." Which more or less answered the question for me, even if he was being a bit hyperbolic.
nutjob2 3mo ago
Why would anyone let you do that? What's their incentive? I assume you're offering something as security for that money (shares?) but why would people complicate an already risky proposition further or go into the money lending business that they're not in?

jedberg 3mo ago

Insiders aren't allowed to short a stock. It's against the law.

tonfa 3mo ago
Against corporate policy, it's against the law only if they trade on material non public information. Once the lockup expire they'll be able to trade (sometimes there's trading window but some tech company don't have any for lower level employees), and they'll still be insiders.