Regulatory filings show that three days later, Chief Financial Officer John Gamble sold shares worth $946,374 and Joseph Loughran, president of U.S. information solutions, exercised options to dispose of stock worth $584,099. Rodolfo Ploder, president of workforce solutions, sold $250,458 of stock on Aug. 2. None of the filings lists the transactions as being part of 10b5-1 scheduled trading plans.
The three “sold a small percentage of their Equifax shares,” Ines Gutzmer, a spokeswoman for the Atlanta-based company, said in an emailed statement. They “had no knowledge that an intrusion had occurred at the time.”
The timing is very suspicious, but if they can prove that they had no knowledge, then they are safe. Given their titles, that seems like a dubious claim.
I agree the timing is suspicious, but the amounts are pretty small. Even if the stock drops 20% long term due to this (which IMO is highly unlikely), a high ranking executive risking a jail term to avoid losing 50k of stock is (again IMO), absolutely irrational.
After a highly publicized six-week jury trial, Stewart was found guilty in March 2004 of felony charges of conspiracy, obstruction of an agency proceeding, and making false statements to federal investigators
Take the "making false statements to federal investigators" one for example, the "false statements" don't have to be at all related to the investigation (or eventual prosecution) at hand, they could have nothing to do with her personal financial matters, they just have to something you say that was not true during the course of the investigation.
Or "conspiracy" and "obstruction", both have a long history of providing law enforcement and prosecutors plenty of leeway to take punitive measures regardless of the feasability of the original case.
Very similar to the long history of 'resisting arrest' and 'assaulting a police officer' being used on a more localized level whenever a citizen did not show total obedience to police, regardless if they committed a crime or not.
More so considering that prior to the sale John Gamble (the CFO) hadn't sold a single share in the three years that he has been with the firm.
https://finance.yahoo.com/screener/insider/GAMBLE%20JOHN%20W...
http://www.nasdaq.com/quotes/insiders/gamble-john-w-jr-60842...
You act as if this is a real senario and would have a non-negligible probability of occurring.
Is that true? What do you mean by "all the time"?
https://www.bloomberg.com/view/articles/2014-06-17/there-mig...
thanks.
If whoever owns those options exercises them today (And covers their short position at a price of $125) they will make ~$2.5m on a ~$200k bet.
This is why the options market is the first place regulators look on insider trading.
I wish more people on this forum recognized this
Someone who has deep understanding of the letter of law and uses it to semantically defy the spirit of the law (like tax evasion by exploiting loopholes that were not designed for their use case) do, in my opinion, deserve criminal punishment.
The tax code was designed to tax entities who use more than their fair share of public resources to make private profit. Think about the legions of WalMart semi-trucks ripping up highways that most taxpayers pay for; it gets to profit from its use of infrastructure that it uses way more of than the average taxpayer.
Obeying the intent of these kinds of laws as they were written originally requires ethics that many corporate individuals simply don't have.
From a trade policy perspective alone we have plenty of supporting evidence among developed countries of self-serving policymaking. Ha-Joon Chang, economist at Cambridge, has written several books criticizing neoclassical economics policies commonly used by both left and right wing policy makers across many developed economies including one literally called "Kicking Away the Ladder" describing how an alarming trend for developing countries to make trade and domestic economic policies that close off tools these countries used themselves to grow their economies. A recent case of not following conventional policies and playing into the hands of the ultra wealthy is Iceland following their real estate collapse and now subsequent rebuilding on their terms as suggested by economist Michael Hudson, another critic of neoclassical economic policies.
Regulatory capture is one of several by-products of cronyism and an oligarchical rather than impartial, equal opportunity system but even in a toy case study in sports there is clear evidence of bias with regulatory experience http://onlinelibrary.wiley.com/doi/10.1111/coep.12240/abstra... If there's policymaking and enforcement bias over time in something with as little consequence as sports but also certainly fiscal motivators (for teams, NHL Commission, etc) it would be strange if our government policies would be exempt from the same human dynamics that is specifically meant by those with hidden information to stay obscure and hidden. But not a whole lot of grant funding out there to investigate corruption exactly, so rigorous academic research on corruption, regulatory capture, and other perversions of capitalist society is sparse, oftentimes difficult to get solid data, and thus difficult to cite in a random Internet comment to the satisfaction of pedantic critics that react to defend any assailment of the much-maligned wealthy.
I'll omit the studies showing those with wealthier backgrounds showing tendencies toward far more loose ideas of lawfulness and fairness compared to the general population.
Also, I wrote it partly tongue-in-cheek in tone responding to a potentially more inflammatory, generalized, presumptuous comment and somehow that was ignored?
If there's a history of these execs selling similar amounts of stock in other quarters, then it's probably not insider trading.
If the paperwork trail started an hour after the first meeting where they learned about the breach, and they had never sold stock before, then it's probably insider trading.
Since the truth is somewhere in between, it's hard to say. It's hard to believe that these people didn't recognize the optics of what they were doing. But, that's why we have investigators and courts.
It would be highly unusual for the CFO not to have the burden of confidence but even for a division president it's not clear they'd have corporate officer responsibilities.
During compliance training in my old life they covered the classic "overheard in a coffee shop" example as a way to highlight that a barista does not owe confidentiality to a random public company. However, I don't think it's ethical behavior regardless of whether it'd result in a conviction.
That's what 105b-1 trading plans are for. If they had used them there would be no questions to ask.
The reasoning, as I heard it, was that all farmers who hedged their own crops with commodities trading, had some amount of insider knowledge just by looking at their own farm/crop/weather. Stealing a data report before it is publicly announced, however, seems like it would violate some laws. Paying to access reports early seems to be a lucrative offering of some of the data providers.
What would happen if a Executive found out about a data breach, sold some stock, but when the breach was announced later the stock price remained flat or went up (just for the sake of argument). Would that still be insider trading?
Public companies typically have scheduled sales of their options for people at this level. This was not that.
If you end up being right, it will have been almost pure luck, but it may reinforce certain incorrect assumptions, like your theory that this single criteria was the deciding factor, or that this kind of armchair analysis is productive.
Point being: even if you are right, it's probably a bad idea to even take the position to begin with.
However, whether these managers broke the law and if and how they should be punished is a legal question most people here should probably shut up about.
Moreover, is there a law about impersonating lawyer in a public forum (not that any ethical person would do that of course)?
Claiming that you are someone you're not on the Internet is so commonplace it is hard to see where any trouble would come of it by itself. Again it's different if you knowingly cause harm to others.
I'm not a lawyer. This is not legal advice. Or maybe I am and it is. Who knows.
In most (all, I think) US jurisdictions, providing legal advice is practice of law, and doing it without a license to do so in the state is prohibited (usually, a crime.)
This isn't not legal advice and I am not a lawyer. Consult an actual lawyer licensed in your state before deciding whether or not you should provide legal advice.
Legal advice should be limited to someone who is an attorney. There are ways around that giving of advice, you can say, "if air were in that position I would do xyz." Or "when that happened to me my attorney said I should xyz."
Practicing law without a license is a crime albeit one not often prosecuted unless you are representing yourself as an attorney and in most cases that involves the transfer of monies for those legal services but not always.
Busted!
Or, "free legal advice is worth what you paid for it."
There is a reason that lawyers online are very quick to point out that they are not opening up such a relationship.
So they give legal advice, then the person reads the advice, and acts on it. If it's wrong then they can sue.
IANAL
It's mostly to remind people to not trust advice on the internet. While the person giving legal advice might be correct, they haven't read and understood the law with the legal background a lawyer has.
[0] https://www.canlii.org/en/on/laws/stat/rso-1990-c-l8/latest/...
I've always taken it as "I want people to assume that I know what I'm talking about, unless there are negative consequences. I still want to chime in, though." That said, I'm not a sociologist, and you should procure advice from an expert before forming opinions about people on the internet you've never met.