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It's curious that people on this thread are talking mostly of "dem stupid algorithms", while the part about the "securities fraud" seems much more interesting t

by krick 12y ago

It's curious that people on this thread are talking mostly of "dem stupid algorithms", while the part about the "securities fraud" seems much more interesting to me. It's easy to see that release makers tried as much as they can to make it obvious that it's a joke. Pretty stupid one, as whole this "tradition" of 01.04 is. But while Bloomberg guy obviously tries to justify Tesla, he is citing the definition that, in my opinion, shows that it is securities fraud. Because enough with this "hey, it's a joke" attitude, we have facts. Statement about "Tesla Model W" is untrue — a fact. Tesla gained from that — fact. "Reasonable" is very ambiguous word, and it is a shame that some judge can decide what is reasonable and what isn't, but I would say that an investor (and it doesn't mater if it's a human, a company or a machine) who makes money by investing on daily basis can be called reasonable as a matter of fact. And the likelihood of it altering the price turned to be substantial indeed, as we can judge by what happened. I think that "jokes" like that can and should be viewed as fraud, and it should be punished. After all it's not like serious shit doesn't happen on 1st of April.

seanp2k2 12y ago
As I see it, it's basically a question of whether a computer gets to be called "reasonable". Since the definition of "reasonable" starts off with (of a person) having sound judgment; fair and sensible. "no reasonable person could have objected" synonyms: sensible, rational, logical, fair, fair-minded, just, equitable ...I would say that a computer isn't reasonable. I would go on to argue that whoever let a computer read headlines and use complex pattern-matching to bet large sums of money was also not very reasonable or responsible.
krschultz 12y ago
Laws are strewn with the "reasonable" standard because there are unreasonable people that will sue over stupid things. It's not sad that "some judge" will have to figure out what is reasonable, that's their job. Do you think it is reasonable to make a trade based on a headline without reading the article? What happens if a company accidentally screws up the headline, are you going to sue them? Any reasonable investor that read the article knew it was a joke, especially if you saw the picture.
- krick 12y ago
  You should have added "I think it's not sad", because it's your opinion. Your opinion isn't that important. I disagree with your opinion. And you see, that's exactly why it is a problem: we are both humans, both might be not completely stupid, both have opinions and our opinions don't match. So if we are both judges it would cost somebody (some human exactly like us, I would add) something important — it would matter dearly to him if you or me is a judge this time. And it would be "just our job". Huh. As if we (they) were gods and not some mortal humans just like himself. A guy he sees first time in his life: not even a king or a village elder (who at least did earn his respect somehow). So that's why I argue it is a shame that some judge can decide what is "reasonable" and what's not, especially when the whole "guilty/not guilty" thing depends on that single word. P.S. Ah, and let me comment on that last sentence of yours. I can be blind investor. From Asia. Maybe too literal or not very bad-humor-sensitive. Just smart enough to make money by trading — as these algorithms are. So I didn't see a picture, don't pay much attention to that "April 1'st" thing, and don't see why Tesla couldn't release a watch. I guess I'm in trouble! And even if there's no single person like this imaginary me: you have no rights to decide if he deserves to be protected by "securities fraud law" like everyone else or not.
  - mejari 12y ago
    >You should have added "I think it's not sad", because it's your opinion Then why didn't you add that when you said >it is a shame that some judge can decide what is reasonable and what isn't when that is your opinion? And whether or not it's an opinion is irrelevant, because it is exactly the way the system is intended to work. And there are checks and balances against your hypothetical situation, namely appeals. Hyperbole about duly appointed judges being 'gods' notwithstanding. (Also, a king by definition earned respect? Do you know how monarchies work?)
  - sgift 12y ago
    As an investor you are expected to do "due diligence" before making an investment decision. If you fall for a very simple April 1st statement (nope, I don't like that tradition either, but that's not the point) you failed at due diligence. No one forced you to buy the moment you read the headline and after reading the post its intention was obvious. That it was a joke is not even important, anyway. If you misread a post that Teslas R&D researched a new battery with hundreds of hours capacity, loading in 5 seconds into "all new Teslas will include a battery that .." and start buying Tesla stock then it is your problem, too. The information was there. Whether you use it or not is your own problem.
s73v3r 12y ago
So then why didn't similar things happen with Google Fiber Dial Up Mode?
deweller 12y ago
Do you think Google is guilty of securities fraud as well? There are several statements on the Google Actual Cloud announcement page that are untrue. I think a prosecutor would consider it a waste of time and resources to prosecute this as fraud. I would hope any reasonable judge would see there was no intent to commit fraud here.
- krick 12y ago
  Yes, of course: in case if there's information that some press-release contained false information and affected the market significantly. I don't know if there's something on Google, matching these two parameters. My point is that it doesn't really matter what anybody thinks: it matters what everybody does and what happens because of that. Laws should not be ambiguous. It's widely known that legal system is a mess and a machine or a human without special education cannot operate in that, but we should strive to improve that and not nod and smile at examples of how imprecise and complicated it is. If it is allowed to tell lies on financial market on 1st of April — it should be specifically pointed out in the corresponding law. If it's not allowed — we shouldn't assume it's allowed. And, more specifically, we shouldn't allow that: meaning that everybody who does break a law, should be punished. If it's not always true — the law must be rewritten to be made more clear, and NOT "ah, we'll put some ambiguous definition: some guys later(=judges) will decide if it's ok". If "some lies" on financial market are ok "because it's a joke!" — it has to be specifically described in that law which lies are allowed, and what attributes does a "joke" have. Again, if there's no exceptions — then there's no exceptions and any lie that produces changes in the market is a fraud, no matter if you/me/somebody else likes that lie or not.
  - michas 12y ago
    "If it's not allowed — we shouldn't assume it's allowed" - that sounds like definition of totalitarianism to me. Every freedom-loving country in existence follows exactly opposite rule "if it is not forbidden, then it is allowed". Otherwise we all end up being treated like slaves.
  - npunt 12y ago
    If you needed a law for every possible circumstance of actions that could occur, you'd have an even more complicated legal system. And one that would fall apart under its own brittleness quite quickly. And would tend toward a dystopic totalitarian state in the meantime. While I agree the legal system is definitely a mess and needs to be made clearer, more accessible, and more machine readable, I think you're also dismissing (or unaware of) any and all scholarship in law or philosophy. Laws will always have some ambiguity, values precede laws and thus there are 'just' actions that go against the written law, interpretation is a necessity in human matters, the legal system evolves with the changes in the world and can never be all-encompassing, Judges have at least some training in these matters, language is ambiguous and evolves and is the medium of law, etc. And fwiw, it sounds like the 'joke' was actually a statement about the public markets, and produced evidence to show that the automated trading systems we have can be destabilizing. This evidence, in the form of a joke, is memorable, and can be recalled and used by people during a time that they may be building consensus or making decisions around these matters. And then those decisions may become laws, superseding the ones you're interested in enforcing. A bit of subversion, demonstration, and tests of legality are how the system moves forward.
glesica 12y ago
Any reasonable human would know it was a joke. Unless every algorithmic trading firm is going to publish their algorithms publicly, I think it is unreasonable to expect a company to be held responsible for what an algorithm would think about a statement.
- krick 12y ago
  Everyone here is forgetting that it isn't even a fact that it was algorithmic decision: it was just journalists guess. And it may be not reasonable to expect a company to be held responsible for what an algorithm would think about a statement in general, but I'd say it's very reasonable to hold a big company responsible for whatever it says or does, when it affects market operating amounts of money some of us can't even imagine. Moreover, strictly speaking there's no such thing as "algorithm thinks" or "algorithm decides". There's a trader: he thinks and decides. If he does it with a dice, or a brain, or a pen and paper, or computer — doesn't matter. As far as I know, machines still are not responsible for what they do: their masters (programmers) are.
  - glesica 12y ago
    >...but I'd say it's very reasonable to hold a big company responsible for whatever it says or does, when it affects market operating amounts of money some of us can't even imagine. To me, this seems like a flaw in the financial system. I realize that public companies are held to higher standards of behavior in their communications, but I really feel that the standard should be enforced based on what a reasonable human would conclude, not based on what a currently state-of-the-art computer program would conclude. > If he does it with a dice, or a brain, or a pen and paper, or computer — doesn't matter. I agree with this 100%, but I would then say that a company shouldn't be responsible for a trader deciding poorly. If the trader uses an algorithm that can't handle a well-known custom like April Fools Day, then, to me, that is the trader's problem.
ghaff 12y ago
On the one hand, I don't really think this is fraud for the reasons that the Bloomberg writer said. On the other hand, I tend to think it's generally bad practice for companies to put out fake press releases as jokes. It's an official communications channel and one person's obvious joke is another's weird but legitimate announcement--especially if they only made it through the first paragraph. And it's one small step from releasing jokey press releases for fun to releasing jokey press releases to intentionally manipulate the market in the short term. Companies can certainly have fun in various ways although I tend to think the April 1 thing is getting old. But I'm not sure that official press releases are necessarily an appropriate vehicle. It's all fun and games until someone loses an eye :-)
DannoHung 12y ago
It's not fraud if they actually make a watch.

by krick 12y ago

seanp2k2 12y ago

As I see it, it's basically a question of whether a computer gets to be called "reasonable". Since the definition of "reasonable" starts off with (of a person) having sound judgment; fair and sensible. "no reasonable person could have objected" synonyms: sensible, rational, logical, fair, fair-minded, just, equitable ...I would say that a computer isn't reasonable. I would go on to argue that whoever let a computer read headlines and use complex pattern-matching to bet large sums of money was also not very reasonable or responsible.

krschultz 12y ago

Laws are strewn with the "reasonable" standard because there are unreasonable people that will sue over stupid things. It's not sad that "some judge" will have to figure out what is reasonable, that's their job. Do you think it is reasonable to make a trade based on a headline without reading the article? What happens if a company accidentally screws up the headline, are you going to sue them? Any reasonable investor that read the article knew it was a joke, especially if you saw the picture.

krick 12y ago
You should have added "I think it's not sad", because it's your opinion. Your opinion isn't that important. I disagree with your opinion. And you see, that's exactly why it is a problem: we are both humans, both might be not completely stupid, both have opinions and our opinions don't match. So if we are both judges it would cost somebody (some human exactly like us, I would add) something important — it would matter dearly to him if you or me is a judge this time. And it would be "just our job". Huh. As if we (they) were gods and not some mortal humans just like himself. A guy he sees first time in his life: not even a king or a village elder (who at least did earn his respect somehow). So that's why I argue it is a shame that some judge can decide what is "reasonable" and what's not, especially when the whole "guilty/not guilty" thing depends on that single word. P.S. Ah, and let me comment on that last sentence of yours. I can be blind investor. From Asia. Maybe too literal or not very bad-humor-sensitive. Just smart enough to make money by trading — as these algorithms are. So I didn't see a picture, don't pay much attention to that "April 1'st" thing, and don't see why Tesla couldn't release a watch. I guess I'm in trouble! And even if there's no single person like this imaginary me: you have no rights to decide if he deserves to be protected by "securities fraud law" like everyone else or not.
- mejari 12y ago
  >You should have added "I think it's not sad", because it's your opinion Then why didn't you add that when you said >it is a shame that some judge can decide what is reasonable and what isn't when that is your opinion? And whether or not it's an opinion is irrelevant, because it is exactly the way the system is intended to work. And there are checks and balances against your hypothetical situation, namely appeals. Hyperbole about duly appointed judges being 'gods' notwithstanding. (Also, a king by definition earned respect? Do you know how monarchies work?)
- sgift 12y ago
  As an investor you are expected to do "due diligence" before making an investment decision. If you fall for a very simple April 1st statement (nope, I don't like that tradition either, but that's not the point) you failed at due diligence. No one forced you to buy the moment you read the headline and after reading the post its intention was obvious. That it was a joke is not even important, anyway. If you misread a post that Teslas R&D researched a new battery with hundreds of hours capacity, loading in 5 seconds into "all new Teslas will include a battery that .." and start buying Tesla stock then it is your problem, too. The information was there. Whether you use it or not is your own problem.

s73v3r 12y ago

So then why didn't similar things happen with Google Fiber Dial Up Mode?

deweller 12y ago

Do you think Google is guilty of securities fraud as well? There are several statements on the Google Actual Cloud announcement page that are untrue. I think a prosecutor would consider it a waste of time and resources to prosecute this as fraud. I would hope any reasonable judge would see there was no intent to commit fraud here.

krick 12y ago
Yes, of course: in case if there's information that some press-release contained false information and affected the market significantly. I don't know if there's something on Google, matching these two parameters. My point is that it doesn't really matter what anybody thinks: it matters what everybody does and what happens because of that. Laws should not be ambiguous. It's widely known that legal system is a mess and a machine or a human without special education cannot operate in that, but we should strive to improve that and not nod and smile at examples of how imprecise and complicated it is. If it is allowed to tell lies on financial market on 1st of April — it should be specifically pointed out in the corresponding law. If it's not allowed — we shouldn't assume it's allowed. And, more specifically, we shouldn't allow that: meaning that everybody who does break a law, should be punished. If it's not always true — the law must be rewritten to be made more clear, and NOT "ah, we'll put some ambiguous definition: some guys later(=judges) will decide if it's ok". If "some lies" on financial market are ok "because it's a joke!" — it has to be specifically described in that law which lies are allowed, and what attributes does a "joke" have. Again, if there's no exceptions — then there's no exceptions and any lie that produces changes in the market is a fraud, no matter if you/me/somebody else likes that lie or not.
- michas 12y ago
  "If it's not allowed — we shouldn't assume it's allowed" - that sounds like definition of totalitarianism to me. Every freedom-loving country in existence follows exactly opposite rule "if it is not forbidden, then it is allowed". Otherwise we all end up being treated like slaves.
- npunt 12y ago
  If you needed a law for every possible circumstance of actions that could occur, you'd have an even more complicated legal system. And one that would fall apart under its own brittleness quite quickly. And would tend toward a dystopic totalitarian state in the meantime. While I agree the legal system is definitely a mess and needs to be made clearer, more accessible, and more machine readable, I think you're also dismissing (or unaware of) any and all scholarship in law or philosophy. Laws will always have some ambiguity, values precede laws and thus there are 'just' actions that go against the written law, interpretation is a necessity in human matters, the legal system evolves with the changes in the world and can never be all-encompassing, Judges have at least some training in these matters, language is ambiguous and evolves and is the medium of law, etc. And fwiw, it sounds like the 'joke' was actually a statement about the public markets, and produced evidence to show that the automated trading systems we have can be destabilizing. This evidence, in the form of a joke, is memorable, and can be recalled and used by people during a time that they may be building consensus or making decisions around these matters. And then those decisions may become laws, superseding the ones you're interested in enforcing. A bit of subversion, demonstration, and tests of legality are how the system moves forward.

glesica 12y ago

Any reasonable human would know it was a joke. Unless every algorithmic trading firm is going to publish their algorithms publicly, I think it is unreasonable to expect a company to be held responsible for what an algorithm would think about a statement.

krick 12y ago
Everyone here is forgetting that it isn't even a fact that it was algorithmic decision: it was just journalists guess. And it may be not reasonable to expect a company to be held responsible for what an algorithm would think about a statement in general, but I'd say it's very reasonable to hold a big company responsible for whatever it says or does, when it affects market operating amounts of money some of us can't even imagine. Moreover, strictly speaking there's no such thing as "algorithm thinks" or "algorithm decides". There's a trader: he thinks and decides. If he does it with a dice, or a brain, or a pen and paper, or computer — doesn't matter. As far as I know, machines still are not responsible for what they do: their masters (programmers) are.
- glesica 12y ago
  >...but I'd say it's very reasonable to hold a big company responsible for whatever it says or does, when it affects market operating amounts of money some of us can't even imagine. To me, this seems like a flaw in the financial system. I realize that public companies are held to higher standards of behavior in their communications, but I really feel that the standard should be enforced based on what a reasonable human would conclude, not based on what a currently state-of-the-art computer program would conclude. > If he does it with a dice, or a brain, or a pen and paper, or computer — doesn't matter. I agree with this 100%, but I would then say that a company shouldn't be responsible for a trader deciding poorly. If the trader uses an algorithm that can't handle a well-known custom like April Fools Day, then, to me, that is the trader's problem.

ghaff 12y ago

On the one hand, I don't really think this is fraud for the reasons that the Bloomberg writer said. On the other hand, I tend to think it's generally bad practice for companies to put out fake press releases as jokes. It's an official communications channel and one person's obvious joke is another's weird but legitimate announcement--especially if they only made it through the first paragraph. And it's one small step from releasing jokey press releases for fun to releasing jokey press releases to intentionally manipulate the market in the short term. Companies can certainly have fun in various ways although I tend to think the April 1 thing is getting old. But I'm not sure that official press releases are necessarily an appropriate vehicle. It's all fun and games until someone loses an eye :-)

DannoHung 12y ago

It's not fraud if they actually make a watch.