A cautionary tale:
Whenever people come up with a good caper, they always ruin it by getting greedy. Two guys who worked for brokerage firms made millions (about $7m total) by trading on insider information. They got caught when the Feds found it suspicious that a 63-year old retired underwear factory worker made almost $3 million in the stock market. How'd she do it? On several occassions she bought stock in company's right before they were acquired by another company, including Gillette before P&G bought it.
This woman is the aunt of one of the guys involved. They also traded stocks through a stripper's account. They even asked her and her stripper friends to pump their Wall Street clinetelle for stock tips. That never scheme never bore fruit.
Their final angle was to hire guys to get hired as couriers, and then steal advance copies of BusinessWeek. Then they bought the stocks that were mentioned in the company's influential "Inside Wall Street" column. They actually made about $500,000 from this part of it.
So the moral is, if you are stealing, do it discreetly, when you get greedy, that's when you get caught.
The don't think their business week tactic is "insider trading" but nonetheless there is probably an SEC rule that makes this illegal. By the way there is no law that prevents a person from trading on insider information as long as it is not improperly obtained. For example, Barry Switzer in a luxury box at a game with some Corporate Hot Shots and he overheard these Big Wigs discusses some big merger. he went out bought the stock and made a bundle. The SEC brought an investigation but in the end the Court held that Switzer did nothing wrong because he overheard the information. However, before you get any bright ideas, there was the case of the air conditioning repairman who thought it would be a good idea if the air conditioning in the conference rooms conveniently broke down during big corp. meetings. This character was convicted of insider trading because he intentionally put himself in a position to "overhear" the info.
ReplyDeletethey had the guy steal the magazine. If that doesn't qualify as improper I don't know what does.
ReplyDeleteYes paul, but my point was that the info contained in Business week is not "inside information" in as much as it has been disseminates outside the company to people who were not obligated to maintain its confidentiality. Unless you tell me that this courier was under an obligation to keep all the information contained in the papers that he carried confidential until the first newstand opened to sell its first paper, then I believe the info was no longer inside info. While it may be unethical and subject to some SEC catch all provision is another story.
ReplyDeletewoah interesting
ReplyDelete