Insider trading - with pathetic sentencing it will never stop

[McLovin]

Re: The Consumer Thread

I don't know why Orion's trading intentions are inside information - Orion is not inside the company, it's just a market participant.

I think you're defining insider too narrowly. The Corps Act defines inside information as...

"inside information " means information in relation to which the following paragraphs are satisfied:

(a) the information is not generally available;

(b) if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of particular Division 3 financial products.

And an "insider" is anyone who possesses that information...

Prohibited conduct by person in possession of inside information
(1) Subject to this Subdivision, if:

(a) a person (the insider ) possesses inside information; and

(b) the insider knows, or ought reasonably to know, that the matters specified in paragraphs (a) and (b) of the definition of inside information in section 1042A are satisfied in relation to the information;

Suppose Orion Asset Management announces they want to buy XYZ... would a reasonable person expect this information to move the market? I'd say the answer is actually No. It might move the market... but there is no certainty of that. It depends on the stock and how the trader plan to execute the trade.

It's possible if you casually came across that information you could make that defence, but when you're making hundreds of thousands by front running a FM's trades it's much harder to argue that you didn't think that information would move the market. In the end, he was on trial for conspiracy to commit the act, and that relied on Hartman's testimony that they had planned it. I wonder why they didn't go for actual insider trading charge, maybe too hard to make it stick.

I think my initial explanation of the defence was not complete. Curtis was basically saying there was no plan (conspiracy) and the prosecution was saying there was. Part of that defence was that knowing Orion was buying wouldn't move the market, so it didn't meet the definition of insider information. Thus no conspiracy.

Take another example... there are numerous newsletters out there offering stock tips to subscribers. Do you consider them "generally available" even if they are only available to their own subscribers? If the newsletter says it's buying XYZ, and it's subscribers buy as well... is it an insider trading offense? What if the newsletter only has 1 subscriber? Isn't that the case here where Hartman is running the newsletter (illegally perhaps) whilst Curtis is the only subscriber?

Would a reasonable person expect a 1 person newsletter to be moving the market?

The definition is broad, and pretty opaque really, which is why they have the reasonable person test. I think the fact something is disseminated in a newsletter probably makes it hard to call it inside information.

Here is generally available...plenty of interpretation left in it, but probably covers newsletters based on the bit I highlighted.

When information is generally available
(1) For the purposes of this Division, information is generally available if:

(a) it consists of readily observable matter; or

(b) both of the following subparagraphs apply:

(i) it has been made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in Division 3 financial products of a kind whose price might be affected by the information; and

(ii) since it was made known, a reasonable period for it to be disseminated among such persons has elapsed; or

(c) it consists of deductions, conclusions or inferences made or drawn from either or both of the following:

(i) information referred to in paragraph (a);

(ii) information made known as mentioned in subparagraph (b)(i).

(2) None of the paragraphs of subsection (1) limits the generality of any of the other paragraphs of that subsection.

 

[skc]

Re: The Consumer Thread

It's possible if you casually came across that information you could make that defence, but when you're making hundreds of thousands by front running a FM's trades it's much harder to argue that you didn't think that information would move the market.

The point is... Curtis only made money because Hartman traded aggressively.

So is the inside information "Hartman has a $Xm sell order to fill on XYZ and he will trade aggressively"?

That just sounds like one individual's intention.

What if one trader speak with another trading mate that they should both trade XYZ aggressively? Have they committed insider trading?

Anyway... what they did clearly isn't right so I've got nothing against them being punished one way or another.

Now another question.... there has been quite a few examples of research houses publishing fraud reports on various companies (think Sino Forrest or Quindell), but they release the report AFTER they have established their short positions.

- The reports before publication isn't generally available.
- A reasonable person can expect the reports to produce material impact on these companies if made public.

So has insider trading been committed?

 

[McLovin]

Re: The Consumer Thread

The point is... Curtis only made money because Hartman traded aggressively.

So is the inside information "Hartman has a $Xm sell order to fill on XYZ and he will trade aggressively"?

That just sounds like one individual's intention.

Yes. If a reasonable person thinks that would move the price then it is inside information. It's not really any different to someone saying "Rupert Murdoch told me he's going to start buying TEN shares tomorrow".

What if one trader speak with another trading mate that they should both trade XYZ aggressively? Have they committed insider trading?

I don't know about that one, sorry.

Now another question.... there has been quite a few examples of research houses publishing fraud reports on various companies (think Sino Forrest or Quindell), but they release the report AFTER they have established their short positions.

- The reports before publication isn't generally available.
- A reasonable person can expect the reports to produce material impact on these companies if made public.

So has insider trading been committed?

No. I don't think it would pass the first leg of not being generally available information.

 

[SirRumpole]

As if we didn't know,

Insider trading 'rife' among ASX-listed company directors: study

A stockbroker says it's all fine and we should "respect" this practise.

I say BS to that.

https://www.abc.net.au/radio/progra...-asx-listed-company-directors:-study/11537310

 

[Garpal Gumnut]

Any ASF member who is a chartist and who follows company announcements would be aware of the extensive illegal insider trading and manipulation of Australian Markets which is massively under investigated and punished.

A pertinent article on insider trading in the US on the NYSE and penalties approaching $US200m in the SMH shows how far behind ASIC, AUSTRAC and the other organisations involved in monitoring our market and money flow are.

https://www.smh.com.au/business/mar...t-has-a-whatsapp-problem-20220821-p5bbkg.html

It would appear that with WhatsApp, Signal and Telegram the executives and traders of Australian companies, funds and banks are working in a risk free atmosphere when doing deals and sharing information contrary to good governance without informing the market and are in fact acting illegaly. These deals cause untold losses to ordinary investors and traders.

gg