Actually, the real legal insider trading is the trades that you _don’t_ place based on insider knowledge. Eg, if you know that the iPhone is years ahead of everything else and you happen to be holding Apple stock, then you won’t let whoever is managing your portfolio sell any of it when otherwise you may not have cared. There’s no way to prove illegality for _not_ placing a trade.
> if you know that the iPhone is years ahead of everything else and you happen to be holding Apple stock, then you won’t let whoever is managing your portfolio sell any of it<p>This is what executives with stock based compensations can an usually do.<p>we only regulate the sell side (or buy side), but not the inaction side (where you hold your existing position). I have not thought of a good way to make the market aware of these choices, in a way that enables market efficiency.
There's already hedge funds that scrape the insider selling data for the executives.<p>You can then build a statistical arbitrage alpha based on the difference between an ordinary amount of selling (conditioned on a bunch of stuff) and a lack of selling/accelerated selling.
For the top execs of public companies you can see what their holdings and transactions are anytime you like. You can also easily see when they haven’t sold. Any advantage here is already mined by people that price stocks for a living unfortunately.<p>Now if you could see the buying and selling for the next level below them somehow, that would be a great advantage (and also very illegal).
> Now if you could see the buying and selling for the next level below them somehow, that would be a great advantage (and also very illegal).<p>You could probably estimate this if the company has a trading window for employees (which I think almost all of them do).<p>Sum up the exec sales, then use the previous accounting data to estimate shares held by employees, and then create an index based on what direction employee sales are trending.<p>Because RSU grants track level (sortof), then you <i>might</i> be able to get a good sense for this, even though there would be lots of noise.<p>Warning: not investment advice (though if you're taking investment advice from a random HNer then you're probably doomed anyway).
There should be a name for this cognitive bias, not accounting for what someone is not doing.
<a href="https://en.wikipedia.org/wiki/Omission_bias" rel="nofollow">https://en.wikipedia.org/wiki/Omission_bias</a> probably? "Omission bias is the moral judgement in which people prefer omission (inaction) over commission (action), and tend to believe harm as a result of commission more negatively than harm as a result of omission."
It just isn't provable, I think it it is technically illegal.
Knowing that a new competitor has entered the market with a superior product is not inside information. The iPhone was public knowledge (that is how the Nokia engineers, who were not Apple insiders, knew about it). Nokia's existing offering was also public knowledge. Sure, some members of the public might have speculated that maybe Nokia was about to respond with its own killer smartphone, and Nokia insiders knew that wasn't the case. But that's not concrete information. Not to mention that "we can't compete with Apple" is ultimately a matter of opinion/prediction, not concrete information.<p>This has nothing to do with inside information or insider trading, it is just "if your company is bad, maybe you should go work for a better company".<p>Also it reeks of AI.
You kind of hand wave off the thing the article describes was the insider information.<p>> and Nokia insiders knew that wasn't the case. But that's not concrete information.<p>This is concrete, if I'm in a leadership or shareholder meeting and I'm authoritatively saying "look, we're done here, everyone thinks we can respond but we can't because of X and Y" then those people now have insider knowledge with gravity.<p>Valuable inside information isn't a thing <i>everyone</i> at a company knows.
Yeah, it's a really bad take. And there is no proof that what killed Nokia was iPhone... I've seen a pretty solid argument that what killed Nokia was Elop / the Microsoft deal.
Absolutely. Even when it had been abundantly clear that WP was a flop, many people including me were hoping Nokia would just pivot to Android, which they didn't (until HMD; too little too late).<p>It was almost like Elop had the assignment to run Nokia into the ground, and I'm still wondering why no one of the shareholders cried wolf.
I’ve done some “insider trading” that I don’t know if was illegal or not.<p>I was in an aisle seat on a plane and the person up one row on the other aisle was the CEO of a small public company typing or reading their upcoming quarterly report in Word on their laptop.
I watched "Enron: The smartest guys in the room" documentary, and I think Lou Pai is the most fascinating character in the story.<p>As quoted online:<p>Lou Pai was a senior executive at Enron who, after having an affair with a stripper, to satisfy his divorce settlement, cashed out $250 million of his Enron stock just before the company's stock price collapsed and it filed for bankruptcy protection.<p>I don't know if he ever knew about the stuff that was going down at Enron, but that guy managed to leave the ship in a nice boat before it sank.
If he structured a divorce, with a judge signed cash settlement to manufacture an insider trade to cash out before the stock went to 0 ... he deserves the title "The smartest guy in the room".
so he might have been the trigger then
This is a bad analogy because it perpetuates a misconception of the basis of insider trading law (in the US).<p>Insider trading has nothing to do with having an information advantage. The markets and their regulators encourage those with an information advantage to use it to as full advantage as they can.<p>Insider trading is based on having an economic obligation to someone else. If you use your knowledge to make money and you don’t share that equitably with the people you have that obligation to, that’s insider trading (in the US).<p>You’d have to torture that definition for it to make sense in the job market and none of the examples in the article match.
> you don’t share that equitably with the people you have that obligation to, that’s insider trading (in the US).<p>so if you simply tell the other shareholders to also participate in the insider trading, you'd be free of charges?
what does "having an economic obligation to" mean in this context?
This is not only is obviously AI writing, it feels like it is the output of a single prompt completely unedited. With some AI generated comics thrown in.
Yep, this is why I couldn't stomach reading all the way through it. I get paid to read this type of garbage all day long. Why would I do it in my own time for free? It's sh*t. I'm not reading any AI articles, and I'm not watching AI-scripted videos unless I'm getting paid a fair wage for it.<p>Maybe if it wasn't so damn shameless. This article did absolutely nothing to try and conceal the fact that it's pure AI slop.
I think the major reason the Nokia engineers didn't jump ship to Apple/Google is that they did not want to move to another country.<p>The article is written like it assumes the Nokia HQ was next door to Apple/Google.<p>There is another type of insider trading: If an engineer had stayed at Nokia but bought a lot of shares in Apple after Apple launched the iPhone, would that still be considered insider trading when the engineer did not have any non-public information about Apple, only in which way the general market was moving?<p>A lot of people laughed at smart phones in 2007-2010, the market majority did not value them and did not predict Apple's stock would grow.
This is information asymmetry. The nokia engineers knew something that the rest of the world didn't and were able to use it to their advantage.<p>In any transaction if you know less than the other party, you're at a disadvantage. I was just thinking this morning I could've negotiated a much higher comp for my current job if I knew just some of things about the company I know now.
Really stretching the language to make it meaningless. Changing a job is now insider trading? While there's no actual trading of anything? No shares being bought or sold. No insider information being leaked out.
There are explicit insider trading forms such as SEC forms 3, 4, and 5. Insiders are allowed to trade as long as it is declared to the government. The issue is with trading while having material non public information. Frequently trades are executed on an explicit schedule with rule 10b5-1 to act as a defense against accusations of trading on MNPI.
The first paragraph of the article drove me insane for that reason. MNPI is one of the bedrocks
For a stable market system. If you trust, on some level, that the people who are counterparty to your trade and not pulling one over on you you’re more likely to participate in the market. The more that trust degrades, the less likely people are to want to interact with the market. The fewer people, the worse prices/spreads get.<p>Efficient and tight markets are almost entirely predicated on being able to determine that any informational asymmetry is irrelevant over differing time horizons.
A founder at my company does this. Sells $$$ of shares every few weeks.<p>Amusing the press report the sales as if he's selling due to something that's happening to the company that week.
This is not an “insider trading”, it is an insider’s knowledge (affinity to knowledge) and ability to use it.
Also see the famous case of<p><a href="https://en.wikipedia.org/wiki/Dave_Mustaine" rel="nofollow">https://en.wikipedia.org/wiki/Dave_Mustaine</a><p>who left Metallica to found Megadeth.
Genuine question, what inside info did he have?<p>Also<p>"Initial drummer Carruthers was replaced after Mustaine and Ellefson decided they could not trust him. Carruthers had chosen to hide his black heritage from them by claiming he was Spanish, and they could not understand why he would deceive them.Brett Frederickson joined the band in November 1983 as their next drummer."<p>That move probably hasn't aged well. Pretty nasty.<p>Edit:
I can't recall which podcast I heard this, but ismtbhebthe guy that was sad that his band didn't sell as many records as Metallica?
I don't understand what happened, he hid the fact that he was black from them, they couldn't understand why he'd hide it, and they fired him? Isn't this kind of exactly why he'd hide it from them?
Completely unrelated to the article claims.
How many people think this way, jump ship, and end up being wrong?
Good article. I feel this way about my job :/
<a href="https://pelositracker.app/" rel="nofollow">https://pelositracker.app/</a><p><a href="https://www.quiverquant.com/strategies/s/Congress%20Long-Short/" rel="nofollow">https://www.quiverquant.com/strategies/s/Congress%20Long-Sho...</a>
I read the article and I’m far more interested in talking about actual legal insider trading in the equities market<p>You may not be able to trade your company’s stock, or a competitor’s if you have knowledge that was under an employer agreement, but you can trade your sector and correlated assets<p>You can have an edge, it’s not a legal issue.
I assume you mean things like trade secrets that you cannot disclose? That is legal because it is not information that is confidential the same way as say financial results are. It is confidential, but for different reasons. It also tends to be much more long term information so people cannot make a quick profit from it. Its also impractical to regulate.
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On the flip side, even if the company is on the way up and you're on some team that's at the center of it and you'll never benefit from it if your manager doesn't like you. All the opportunity to do all the things that lead toward career growth and compensation will go to other people.
Unfortunately doesn't work that smoothly everywhere because outcomes are often tied to larger unknowns whether it is will AI bubble pop or will the global economy take a dip.<p>Access to internal data isn't a crystal ball
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