[HN Gopher] An insider-trading indictment shows ties to Bloomber...
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An insider-trading indictment shows ties to Bloomberg News scoops
Author : onetimemanytime
Score : 85 points
Date : 2021-04-02 19:12 UTC (3 hours ago)
(HTM) web link (www.cjr.org)
(TXT) w3m dump (www.cjr.org)
| raymondh wrote:
| Life imitates art.
|
| "Blue horseshoe loves Anacott Steel" - Gordon Gecko, Wall Street
|
| https://www.youtube.com/watch?v=h8PLrkEXWnc
| throwaway789256 wrote:
| An inside trader in the UK was also shown to be exchanging
| information with Bloomberg News's reporters:
|
| https://www.bnnbloomberg.ca/the-mystery-millionaire-who-haun...
|
| What's not being said here is that for the trader to have timed
| his bets so precisely, the reporter would have had to tell him
| _when_ the story was coming out.
|
| The anonymous sources on Bloomberg M&A scoops all have insider
| information one way or the other (think "provider of professional
| services in the deal space"), otherwise they would have nothing
| to say. While many of them are not stupid enough to trade on that
| information, nearly all of them get some kind of benefit from it,
| usually in the form of two-way information exchange with the
| reporter. Since they work on deals, they want to know about
| deals, because their livelihoods depend on deal flow.
|
| VCs know this dynamic well, but they are far less regulated,
| because they primarily work with private companies, not public
| ones.
| mdeck_ wrote:
| > What's not being said here is that for the trader to have
| timed his bets so precisely, the reporter would have had to
| tell him when the story was coming out.
|
| Based on what are you speculating this? I just looked at the
| indictment, which is linked in the article. Page 8 shows that
| the timeline between the relevant inside activity and the
| article's appearance in Bloomberg running to multiple weeks or
| even a month. More generally, I don't see anything that would
| require an inside trader to know exactly when a news story on
| these kinds of topics is going to come out. If they know a
| stock is likely going way up SOMETIME in the near future, that
| is enough to conclude that the trade is a sure bet. So, no need
| for a specific tip (as to article timing) from the reporter,
| and therefore presumably no need for complicity by the
| reporter.
|
| *I do not intend this comment to mean I believe the actual
| reporter actually was not complicit. I don't know the facts of
| this case beyond what is stated in the story linked here.
| throwaway789256 wrote:
| From the story:
|
| > Peltz bought Ferro stock via others' accounts, culminating
| with his last purchase at 9:37 am on March 15, 2016,
| according to the indictment.
|
| > Around six or seven minutes after that final purchase,
| Bloomberg posted a scoop by Hammond and another Bloomberg
| reporter under the headline, "Ferro Said to Have Received
| Takeover Approach From Apollo," a major private-equity firm.
|
| A 6-7 minute gap implies coordination and foreknowledge of
| when the story would go out.
| mdeck_ wrote:
| You've got your causation backwards.
|
| He made a series of purchases... ok... of course his last
| purchase was shortly before the story was published. As to
| this being his last purchase, well of course--why would he
| keep buying after his insider advantage had evaporated? At
| that point there would be nothing more to take advantage
| of. Anyway, this does not show awareness on the part of the
| reporter.
|
| Yes, the fact that his last purchase was close in time
| could show that he received timing information, but it
| could be that he was making lots of purchases over time and
| simply stopped once the story came out.
|
| You note that he started selling after the scoops were
| published. Again, this doesn't prove anything about the
| reporter's (non-)complicity. I.e., OF COURSE he started
| selling after the story published. What did you expect him
| to do? He was waiting on the story to be able to trade on
| effects of its publication. Once it was published, the
| stock's price would have shifted (presumably upwards) based
| on those facts--no more reason to hold the stock!
|
| He bought options, which have time decay. Ok, but we don't
| know that he bought options expiring within a few days or
| weeks rather than months. Anyway, these deal scoops were
| going to come out sooner or later--but reporters want to
| avoid being scooped, so they typically come out sooner.
|
| Overall, I'm not convinced there's anything here. Of course
| a criminal trial would/will make this all clearer...
| kgwgk wrote:
| I imagine that if the story has been published at 9:31 the
| purchase at 9:37 wouldn't have happened and some other
| transaction would have been his last purchase. He may or
| may not have been aware of when the news would be
| published.
| throwaway789256 wrote:
| That is logically plausible. An insider purchase that
| occurs minutes ahead of a market-moving event is merely
| circumstantial evidence, but it is very strong
| circumstantial evidence.
|
| One thing to note is that Peltz bought options as well as
| stock. Options suffer time decay. That is, all other
| things being equal, their value decreases with the
| passage of time. The better you can time your purchase to
| immediately precede a market-moving event, the less time
| decay matters.
|
| In addition, Peltz and his associates started selling
| their positions within a minute of the scoops being
| published. Do you think they just happened to be looking
| at their trading screens during that minute of the day? I
| don't think they would have left that to chance.
| JKCalhoun wrote:
| We must have a craving for justice -- I feel _lifted_ somehow
| when I read about criminals being caught.
| toss1 wrote:
| Could be a combo of that and schadenfreude ... but the deserved
| justice does make it seem more satisfying
| bin_bash wrote:
| Could something like this explain "The Big Hack"?
| wmf wrote:
| Not really. That would require Bloomberg to deliberately
| fabricate a false story so that someone could do insider
| trading based on it.
| slymon99 wrote:
| Honestly, who thinks they can get away with moronically obvious
| insider trading like this? "Oh, I know, I'll take large positions
| right before this reporter publishes MNPI, and I'll do it five
| times". Obviously you are going to get caught!
| onetimemanytime wrote:
| do you think 100% of them get caught?
| vmception wrote:
| this is a pretty reliable way to get caught
|
| brokers and all licensed financial firms are essentially
| deputized to freeze and enforce this stuff on behalf of the
| regulator, who then has time to get a emergency asset freeze
| rubber stamped by an "administrator law judge" who basically
| works on staff at the regulatory agency
|
| then you can prove why you aren't guilty by retaining a good
| lawyer with all that other money you have which isn't frozen,
| you have that right?
|
| the better way is to use a bot to execute the trades right
| after publication, or do it manually and lose a little bit of
| alpha. but he didn't.
| lordnacho wrote:
| The ones who do it this way, yes. Maybe I'm reading it wrong,
| but it looks like he bought the stocks shortly before and
| then sold shortly after.
|
| That's going to show up in a simple search, and there's not a
| lot of alternative explanations for it.
| p1necone wrote:
| Statistically on any stock with a large trading volume
| there's pretty much always going to be _someone_ who bought
| up right before a big announcement purely by chance,
| realized they got lucky and sold immediately afterwards.
|
| It's not obvious to me how you'd separate this from
| intentional trading on insider information. (Unless you
| just investigate everyone).
| lordnacho wrote:
| You'll find that even on some fairly large names there
| isn't all that much activity during the day. There's a
| lot of names, and there's a lot of trading in the
| auctions, so the total volume in the market won't result
| in a steady flow for a particular share.
|
| My guess is it will stick out like a sore thumb if you
| buy x shares right before an announcement and sell x
| right after. Especially if you do nothing else. Pretty
| much as soon as you've exited a second announcement-trade
| red lights should be flashing.
| jbritton wrote:
| I maybe wrong, but I was under the impression that trades are
| essentially anonymous unless they are for a significant
| percentage of the stock.
| esoterica wrote:
| They are anonymous to other participants, not the SEC
| WJW wrote:
| It really depends on what you are trading. For example the
| prototype of a "dumb" insider trade is getting OTM call
| options when you know a company is getting a blowout quarter.
| Large amounts of OTM options trading in a stock that rarely
| sees much options activity is quite noticeable. When the
| authorities notice those, they can (and do) find out who got
| into that position simply by calling all the registered
| brokers and asking them who did it. (With a court order if
| need be, because suspicious options activity just before
| large jumps in stock price is reasonable suspicion of insider
| trading)
| elliekelly wrote:
| Any time there's a big swing the SEC requests data for
| transactions before and after. The time period of their
| requests vary but sometimes they ask for transactions months
| in advance to look for unusual patterns of activity. Insider
| trading is a particularly stupid move because it's only a
| matter of time before you get caught.
| frakkingcylons wrote:
| It seems ethically dubious to publicly name a Bloomberg reporter
| based _only_ on circumstantial evidence.
|
| Don't get me wrong, it is awfully suspicious that the stories'
| timestamps match closely. But I wonder if there's other info they
| have that links the reporter to Peltz.
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(page generated 2021-04-02 23:00 UTC)