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[H] NVIDIA and Dell in Bed on Insider Trading - Page 5

post #41 of 76
Quote:
Originally Posted by Icekilla View Post

And how exactly is this bad? Sorry, I'm not an economist, it's a legitimate question for learning purposes.

It depends upon the economist you talk to. The United States has one of the harsher insider trading laws.

I think some people believe insider trading allows those to manipulate the market and people would just not invest in the market. The volume of shares traded may decrease because people are suspicious they are getting a raw deal.

For example, the corporate insiders' interest may conflict with those of the common shareholders. The shareholders may not trust the corporates at the top to do what is best for the interests of the shareholder.
post #42 of 76
Quote:
Originally Posted by Icekilla View Post

And how exactly is this bad? Sorry, I'm not an economist, it's a legitimate question for learning purposes.

Because if you're powerful/influential enough within the company, or if you have enough shares, you can act on non-public info to artificially bring about outcomes that would affect the public traders, which may never have happened but for the insider trading action.

It would be like changing an instructor's answer key for an exam to benefit your answers--everyone else has the huge potential to get screwed, and if it's bad enough the whole class could fail.
    
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post #43 of 76
Quote:
Originally Posted by mdatmo View Post

Did anybody read the FBI press release?
Quote:
If you are engaged in an insider trading conspiracy—passing inside information on to others, or receiving it—what distinguishes you from the dozens who have been charged is not that you haven’t been caught; it’s that you haven’t been caught yet
They are pretty confident in their abilities.

"You haven't been caught yet". Sounds like something right out of Horatio's mouth (CSI miami), of course they have to sound confident to keep their credibility. One day or the other "everyone" gets caught, "everyone" that they knew about. Anyways, it happens in every big corporation as it was mentioned already, nothing special.
post #44 of 76
Quote:
Originally Posted by rdrdrdrd View Post

People acting on their own information would allow the market to work more efficiently, all 'the market' is is a collection of individuals making choices and to say that they must all have the same information for it to work is silly. I suppose its also unfair that some people can invest millions while i can only have several thousand, but i don't want them to be limited to my level of capital for the sake of fairness. And its not like it doesn't happen anyways, all in all its a waste of government time and money when they could be focusing on more important things.

What, are you like 11?

Quote:
Because if you're powerful/influential enough within the company, or if you have enough shares, you can act on non-public info to artificially bring about outcomes that would affect the public traders, which may never have happened but for the insider trading action.

It would be like changing an instructor's answer key for an exam to benefit your answers--everyone else has the huge potential to get screwed, and if it's bad enough the whole class could fail.

Very well said. Take note rdrd
    
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post #45 of 76
Quote:
Originally Posted by killnine View Post

What, are you like 11?

He might be, either way it's a pretty complicated subject. Guyladouche answered the question pretty well for sure.
post #46 of 76
Quote:
Originally Posted by Icekilla View Post

And how exactly is this bad? Sorry, I'm not an economist, it's a legitimate question for learning purposes.
its not
Quote:
Originally Posted by killnine View Post

What, are you like 11?
And what are you? Someone who decides to respond to an argument with personal insults? Sounds about right there.
Quote:
Originally Posted by guyladouche View Post

Because if you're powerful/influential enough within the company, or if you have enough shares, you can act on non-public info to artificially bring about outcomes that would affect the public traders, which may never have happened but for the insider trading action.
It would be like changing an instructor's answer key for an exam to benefit your answers--everyone else has the huge potential to get screwed, and if it's bad enough the whole class could fail.
Of course if you have enough power to screw everyone else over odds are your probably doing it already and have paid off the right people or used sneakier ways to avoid detection. Your example of the professor's exam doesn't transfer well; there isn't one 'exam' that everyone has to equally take. a better example is an out of school project where some people's parents spend hundreds of dollars to ensure their child gets an A, and while im not saying that it's fair, im saying it shouldn't be illegal. The more you restrict the market the less efficient it is.
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post #47 of 76
Thread Starter 
Quote:
Originally Posted by Humafold View Post

The simplest way to explain it is that they used information that was not available to the public to buy and sell stock. It's illegal. Everyone must be on the same playing field. If you have information that isn't public and you use it to your advantage, or your friend's advantage, you're in a world of trouble.

We're supposed to be on the same playing field but the top brokerage firms certainly aren't. The top dogs pay big money to get access to information milliseconds before anyone else in the world does and use supercomputers to buy/sell orders thousands of times a millisecond. One millisecond can mean $100M to a big firm over a year.. Even the NYSE itself is offering colo for top dollar to clients looking to join in on this at the Mahwah, NJ datacenter.
nyse-server-room-300x199.jpgnyse-hallway-470.jpg

The SEC finally shut down flash orders which allowed traders to see what other investors were buying/selling fractions of a second before anyone else, About 60% of the trading is conducted by high-frequency supercomputers. Then we have 30% of the domestic trading happening in "dark pools" where there is no auditing of transactions. Another problem is quote stuffing. a robotic practice called “quote stuffing.” Robots distribute hundreds of thousands of bids on securities, then withdraw them in milliseconds before anyone can act on them. The practice seems designed to slow the traffic of market data slightly so that humans and other robot traders fall just a bit behind. High-speed traders “can ignore the bogus quotes, but nobody else can,” says Randy New, who works for Abel/Noser, a New York City brokerage firm. “It’s like running the New York marathon and throwing marbles behind you.” Quote stuffing has surged. Just a year ago, for every executed trade, there were four or five limit orders for a stock that were quickly withdrawn without their price being hit. “Now it’s 50, 60 or 70 orders per trade,”

What these guys did is chump change compared to what goes on every day and is perfectly legal because the SEC is so far behind in regulations they can't keep up with the technology. Not to mention the price fixing that Nvidia & AMD got caught in a couple years ago in trying to shut out Intel in the graphics sector.

Quote:
Originally Posted by rdrdrdrd View Post

. a better example is an out of school project where some people's parents spend hundreds of dollars to ensure their child gets an A, and while im not saying that it's fair, im saying it shouldn't be illegal. The more you restrict the market the less efficient it is.
Why shouldn't that be illegal and how could ensuring they get an A/allowing insider trading make the market more efficient? Efficient only to those few who have the inside knowledge to manipulate the market, maybe...
Edited by PoopaScoopa - 1/20/12 at 2:43pm
post #48 of 76
Quote:
Originally Posted by rdrdrdrd View Post

Of course if you have enough power to screw everyone else over odds are your probably doing it already and have paid off the right people or used sneakier ways to avoid detection. Your example of the professor's exam doesn't transfer well; there isn't one 'exam' that everyone has to equally take. a better example is an out of school project where some people's parents spend hundreds of dollars to ensure their child gets an A, and while im not saying that it's fair, im saying it shouldn't be illegal. The more you restrict the market the less efficient it is.

Your attitude makes it impossible to claim that anyone in a position of power does not abuse that power. The case of some people abusing their power does not mean that all people abuse their power. If you want to believe otherwise, and that everyone in the world has paid off everyone else so they can get away with their shady underhanded dealings, that's fine.

People's parents spending hundreds of dollars to ensure their child gets an A is not at all like insider trading--in your example, where is it that the people taking actions are doing so against the law? The exam example, while crude, was apt enough. The "exam" that everyone has to equally take would be following the guidelines accepted for public trading. Going behind those guidelines and not following the accepted rules in order to bring about a favorable outcome for yourself would be very much like changing the answer key to favor the answers you selected, whether they're the correct answers or not.
    
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post #49 of 76
The title of this article is haunting me.
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post #50 of 76
if i had the oportunity to make more money from inside trading hell yeah i would do it. i dont believe it is right but it right on your wallet. wallstreet is a very dirty place. you got to take everything to have and use it to your avantage even if its not legal.
    
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