So Citadel owns one of the hedge funds that short sold gamestop, and also owns Robinhood, and shut down Robinhood trading on gamestop.
How in the world could that possibly be legal and not market manipulation? “Hey, you can’t buy stocks when those would hurt one of our parent companies”, holy shit.
If nothing happens about this (and nothing real will, maybe some token action to prevent this particular scenario coming up again, but no one is going to actually restrict or punish any giant funds) it’s yet another clear and unambiguous signal that the rich get to fuck the rest of us. There’s a lot of that going around these days.
And maybe that’s something that a lot of people think needs to be changed. I don’t think that the body charged with making laws that govern they themselves should be allowed to massage and shape those laws to favor their own interests. Just the way I don’t think lobbyists for industries should be allowed to write the laws that govern their industries, which is a very common scenario that needs to cease. Maybe if we didn’t allow lawmakers to spend most of their days fundraising for their and other party members’ campaigns they’d have more time to do the job we pay them $174K/year minimum to do.
Biden isn’t an insider here either; the point of insider trading laws are to keep “insiders” inside a company from taking advantage of the information they have by virtue of their position within a company, or by virtue of their ownership stake.
So if Biden and Pelosi know that there’s legislation on the way, and they act on it, it’s a bit shady, but by definition it’s not insider trading, as neither is an insider at Tesla.
I certainly don’t disagree there. I was only responding to the contention that it actually was illegal.
Federal legislators have the ability to potentially manipulate any stock or commodity, so if I were able to decree a law, I’d say that they can only buy and sell major indices. I don’t know that I’d go so far as to say that they cannot have any investments at all.
I have a tendency to argue from a standpoint of mala in se rather than mala prohibita. I’m much more interested in defining the absolute right or wrongness of an act rather than the nitpick of whether or not, in this particular time and place, a thing is or isn’t illegal. Because laws can and should be changed in order to maximize absolute justice.
But, as @Dr.Strangelove accurately points out, you don’t have to be an insider to break the law. If you act on a tip, or otherwise non-public knowledge about a security, then you can be prosecuted.
Martha Stewart was not an insider, she still went to jail over acting on a tip that saved her less than $50k.
When I did catering and banqueting, I was occasionally privy to insider information that I overheard in various events, and if I had acted on them with my tiny little portfolio, I would have been subject to prosecution.
Legislators are exempt pretty much only because they are the ones who make the laws, and they don’t want to be subject to them.
It is profiting from non public information they have by virtue of their position in government. The only reason it isn’t part of the definition of insider trading is that the politicians defining insider trading chose to exclude themselves from it.
The alt-/far-right scumbags are jumping on this bandwagon because it lets them indulge in anti-semitic attacks on financial professionals. Check the X-chans. They’re not even using coded language. They’re openly posting gross pictures next to stories about Melvin Capital.
Nazis always watch for parades of angry white people they can jump out in front of.
Where I work, we won a big business deal a while back and the CEO announced it to the company before it was public information. Some of these employees told family members about the big win, and some of those other friends and family. And some subset of those people decided to make a few (mostly small) trades on that information. The SEC tracked down all of them and charged them with securities fraud. Some went to prison; others merely had to pay huge fines. It’s totally irrelevant that the CEO was the only “insider” here and that he didn’t actually do anything illegal.
The event was a good learning experience for the company…
How did the SEC track them down among all the other trades? I can see the SEC having a list of the major shareholders, board members and employees and to be able to cross-reference them but how did they detect a link between friends/family of employees and the company? Is it all down to software that picks up ticks that come within N days of a big announcement or price movement?
No idea. I expect the SEC keeps that information pretty close to their chest so people have a harder time finding workarounds. I expect most of it was normal detective work, though–start with one loose thread, then work from there, looking at timelines, lists of names, etc. And probably some good old pressure, like “tell us who else you told and we’ll make things easier on you”.
Sure, but the point is, nobody in the scenario we were talking about is an insider at Tesla. There’s no inside information about what’s going on within Tesla. They’re insiders in the government, but not to Tesla.
It’s kind of shady, I’ll grant you. But it’s not insider trading as the law defines it. There’s nothing “inside” to Tesla involved in any way- their financials and plans are opaque to her. She knows something environmental, not something inside.
It’s like if I heard from a buddy at my former company that they plan to start offering CBD oil enemas or something in their clinics and as a result, go invest in a CBD oil company. The insider knowledge is about the company I used to work for, not where I’m investing, and that’s the entire point of insider trading. The company I used to work for doesn’t have anything to do with what I did- nothing I did has anything to do with them.
That’s also irrelevant. It’s illegal to trade any stock based on misappropriated insider information. If I, for example, acquired insider information from AMD that they won a huge design win against Intel, it would be illegal to short-sell Intel.
It’s purely the fact that the government is a special case here that makes them immune. Not the fact that they aren’t Tesla and didn’t get insider information from them.
That actually seems to cover these kinds of cases. The Pelosi thing seems a bit weak; anyone could have guessed that Biden would have some EV-related regulation that would help Tesla, and in any case much of their runup happened before the election. But it does seem this act would apply to representatives trading on more specific legislative information.
In a perfect world anyone going into public service would have all their assets placed in a blind trust, along with everyone in their immediate family until after they leave office. There’s a reason getting elected to Congre$$ is a quick run to being a millionaire and there’s nothing okay about it.
Well, what if this is a perfxtly good mechanism for making markets more efficient? If you told me there was a big problem with people using the shorting mechanism to manipulate stocks, I’d probably say that if people hang themselves out on short positions that are not justified based on the health of the company, then someone else will come along and squeeze them until they smarten up and start making bets based on fundamentals instead of trying to game the system from a position of power.
The Pelosi/Tesla link is pretty ambiguous. Why not use a much more obvious link, like when the senators that got the coronavirus briefing before the public went out and bought stock in body bag companies? Both obvious and macabre.