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[Fugee]

Originally Posted by Atticus Grinch

This confirms the only remaining impression I have of Corporations class in LS -- that insider trading must be staggeringly difficult to detect, that it must be ricockulously common amongst the reptilian titans of securities trading, and that the only difference between a fat cat and a dead duck is that the dead duck got too greedy all at once on one big tip rather than playing smart and parlaying trading profits in small enough increments not to warrant attention. Also, don't be a celebrity big enough that an ambitious AUSA thinks he can deter others by making an example out of you -- that part I didn't learn in LS, admittedly.

But I'm a dumbfuck who is muy pobre and didn't have anything on his financial disclosure forms last year other than his house and about $10,000 worth of baby clothes, so don't take advice from me.

I don't think it is difficult to detect that insider trading has occurred but may be more difficult to figure out who is doing the trading. At least it takes a lot more work. I was on a LBO deal when I was a baby lawyer and the NYSE determined there had been a suspicious volume of trading in the couple days before the first announcement. As the ultra-low peon on the deal, I was assigned to make a chart listing day by day from the start of the deal who from the bankers, and the clients was on calls and in meetings. I assume this was given to the SEC as a starting place for their investigation.

If someone got the information by snooping around the offices, it would be easier to get away with it.

[Adder]

Originally Posted by Fugee

I don't think it is difficult to detect that insider trading has occurred but may be more difficult to figure out who is doing the trading.

Who is doing the trading is the easy part (and the basis of "do you know any of these people" FINRA requests that sometimes come around after a deal closes). The hard part is who is doing the tipping, which is where your list making comes in.

If someone got the information by snooping around the offices, it would be easier to get away with it.

Yes and no. As I assume a person who would be willing to engage in insider trading likely would have no problem saying, "I don't know any of those people" even though his tippee is on the list, he probably isn't that easy to identify anyway.

[Mmmm, Burger (C.J.)]

Originally Posted by Adder

I assume a person who would be willing to engage in insider trading likely would have no problem saying, "I don't know any of those people" even though his tippee is on the list, he probably isn't that easy to identify anyway.

What if the tipper merely mentions some key fact innocently:

Evidence Note taker: Hey, how's the Dow Jones deal going?
Unwitting tipper: Dude, it's sucking. I'm going to be up 48 hours over the weekend for a Monday close.
[days later]
SEC: So, unwitting tipper, did you talk to any of the people on this list while grabbing a Snickers?

[Adder]

Originally Posted by Mmmm, Burger (C.J.)

What if the tipper merely mentions some key fact innocently:

Evidence Note taker: Hey, how's the Dow Jones deal going?
Unwitting tipper: Dude, it's sucking. I'm going to be up 48 hours over the weekend for a Monday close.
[days later]
SEC: So, unwitting tipper, did you talk to any of the people on this list while grabbing a Snickers?

Feel free to change the hypo all you want, but the guy who offed himself was allegedly not an unwitting tipper.

But if your unwitting tipper was saying this to someone within his firm, yes, that was my point. It would not be hard to get info by talking to people around the office, and even if you did, that would get you on the list of people who had information, but if you weren't trading ourself (as the dead guy didn't seem to be), it would still make identifying your note taker as the real tipper quite difficult.

[Fugee]

Originally Posted by Adder

Feel free to change the hypo all you want, but the guy who offed himself was allegedly not an unwitting tipper.

But if your unwitting tipper was saying this to someone within his firm, yes, that was my point. It would not be hard to get info by talking to people around the office, and even if you did, that would get you on the list of people who had information, but if you weren't trading ourself (as the dead guy didn't seem to be), it would still make identifying your note taker as the real tipper quite difficult.

If it is not hard to get info by talking to people around the office, there are too many loose lips.* Firms regularly talk to people working on these kinds of deals about the importance of not talking to anyone about the deal, not even within the firm. Not even if they otherwise work on matters involving the company.

*Yes, I know it happens.

[Adder]

Originally Posted by Fugee

*Yes, I know it happens.

This is an understatement.

[Mmmm, Burger (C.J.)]

Originally Posted by Adder

Feel free to change the hypo all you want, but the guy who offed himself was allegedly not an unwitting tipper.

But if your unwitting tipper was saying this to someone within his firm, yes, that was my point. It would not be hard to get info by talking to people around the office, and even if you did, that would get you on the list of people who had information, but if you weren't trading ourself (as the dead guy didn't seem to be), it would still make identifying your note taker as the real tipper quite difficult.

Huh? Cornblum was sneaking around the office in early hours. How is it just as easy to connect him to the insider trading if he's going around asking people what they know? It's a lot more likely for the SEC to make a connection when someone working on the deal can say "whoops, I must have said something to Cornblum" than "whoops, I must have tossed some notes in the trash can and someone grabbed them out."

[Adder]

Originally Posted by Mmmm, Burger (C.J.)

How is it just as easy to connect him to the insider trading if he's going around asking people what they know?

I said neither is easy.

It's a lot more likely for the SEC to make a connection when someone working on the deal can say "whoops, I must have said something to Cornblum" than "whoops, I must have tossed some notes in the trash can and someone grabbed them out."

Right, but this doesn't mean anything unless Cornblum himself was doing the trading, which based on that story it doesn't sound like he was. Which means that now Cornblum gets asked, "do you know any of these people [who traded in the stock befor the announcement]?" Given that he is already breaking the law by tipping, he isn't going to hesitate to lie and say he doesn't, leaving the investigators to have to connect him to someone extrinsically, which isn't easy unless the tippee is a family member.

If Cornblum himself is trading on information from his firm, he is likely pretty easy toast whether someone remembers saying something to him or not.