Hmm, the time on the Twitter post says 1:07PM. The earnings call was 2PM. But I've noticed the Snap investor site always has the presentation put up a bit before the call, like an hour or so. I've read the presentation before the call started plenty of times. Maybe TC just had a prewritten article ready to go, waiting for the presentation, and plugged in the numbers?

The tweet says:

>Yep, TC had the numbers early and published almost 10 min before numbers actually hit the wires.

It appears the official announcement was supposed to be at 4:10pm EDT[1]. The tweet was at 4:07pm EDT. It's likely the tweet was posted several minutes after the TechCrunch article. So that lines up with the TechCrunch article being ~10 minutes early. The author of the TechCrunch article tweeted it at 4:32pm EDT[2]. There is an archive.org snapshot from 4:02pm EDT in which it has a 404[3]. I'm guessing that snapshot was after it had been taken down, and before it had been put back up. Because if it was before it was ever posted, it raises the question of how did archive.org know which URL to snapshot?

[1] https://www.businesswire.com/news/home/20191022006082/en/

[2] https://twitter.com/JoshConstine/status/1186742106175393792

[3] https://web.archive.org/web/20191022200231/https://techcrunc...

A new business model for supporting online journalism emerges!

What is a use case for TechCrunch to have these numbers before they are published by the SEC?

One of the responses to that tweet stated that they are allowed to share their earnings to reporters early with a non-disclosure agreement[0]

[0] https://twitter.com/campuscodi/status/1186768962362568704

What could go wrong with that pracfice?

Some hackers could break in and steal the press releases and make $100M selling them to stock traders. In fact they hacked Business Wire, which was in charge of Snap's earnings release today.

https://www.theverge.com/2018/8/22/17716622/sec-business-wir...

https://www.businesswire.com/news/home/20191022006082/en/

Let's say hackers get info that Snap is about to miss earnings. They sell the info to someone who has the money to trade, that person shorts snap, makes a tonne of money but obviously moves the market. The SEC go "Hmmm... why did snap tick down before the earnings were reported, let's go arrest the guys who made that trade".

1. SNAP is a fairly liquid stock so even shorting a lot won’t move the market very much.

2. It is the day of earnings and typically there is more volume than usual that day, especially in the last hour.

3. Lots of people make (and lose) money the day of earnings. Are you going to arrest everyone who made the right large bet on a stock before earnings? If so that prison is going to very full

We have recent evidence that they're not very good at doing that anymore. Just look at Equifax and Intel, or the recent stories about how people are most likely playing the entire market based on advanced notice on what Donald Trump's tweets are going to do to the market.

Sadly- we can’t disclose.

Publishing of news, the same as the newswires that report earnings. The numbers don't come straight from the company but are usually scheduled on various services for the reporting time.

There are plenty of people involved in handling sensitive news of all kinds. It's not really a problem. The risk of insider trading is rather low because it's easy to catch and has harsh penalties.

Make a deal with a reporter for early info in exchange for favourable coverage?

For coverage, period. It surely isn’t obligated to be positive and Snap isn’t seeing it before publication. Though presumably they wouldn’t share numbers they knew were bad.

Maybe but it's also just a way to get coverage closer to the actual announcement by letting the reporter write their story ahead of time instead of having to rush to get it done.

But that would be insider trading right?

Is it insider trading is if you don’t do anything with the information?

No. Newswire services receive these kind of press releases in advance all the time.

As long as you don't use or share them, you're fine.

No, it’s not. Someone must make a trade based on non-public info for there to be insider trading.

Alright, then I guess I’ll get into reporting, develop relationships with public companies, get some of these numbers and maybe spill them very carefully to who knows who? There’s always telegram or other for me to share it carefully. No one can find out.

Just like anything other crime, if you do it enough to make serious money they'll dedicate resources to going after it. It's the difference between being a dealer and a kingpin and there's not much money to be made being a dealer.

Also, odds are the SEC is punching the names of anyone who makes it big day trading into some NSA type database and if they know anyone who would have had the information that link will be followed up on.

Yes, the SEC definitely follows up on this, or so I've been told. They're not idiots, and this kind of financial crime is basically super-low-hanging fruit for them (probably because many people make the mistake of assuming they are idiots).

> Yes, the SEC definitely follows up on this

Yes, and they're quite adept at it even if you don't think you're leaving a trace. For example: https://www.sec.gov/news/press-release/2014-55

Interesting how the middleman got off without punishment. Shows how narrow insider trading can get, which speaks the the programmer tendency to assume law is code. Rather law is interpreted and in this case only two of the three parties fell under the SEC enforcement. That neither is going to jail is also notable, SEC can take money and burn a career but stealing from the market is lots safer than selling drugs.

Well, for insider trading, it isn't prohibited by law. It's entirely precedent.

That account sounds like at least one of the 3 provided a detailed description of what happened. The SEC weren't listening into the initial conversations they had - presumably they got wind of the trading and then managed to get enough leverage on one of them to make them talk. If they didn't talk, I wonder what level of evidence the SEC would have.

I got a call from them after a cousin I’ve never met traded the stock of the company I was working at. Anybody who works at a public company sees insider information every day. Anybody who thinks they want to profit of it, especially if they think doing so would be easy, can expect a run in with the SEC.

You make it sound like white collar crime is unprofitable.

Lots of history seems to disagree, with only the occasional person having bad luck.

Presumably the idea is that the reporters can prepare a story on them that's live as soon as the numbers are out - kind of like early screenings of movies for reviewers (who are also sometimes sworn to secrecy!) But seeing how much financial value the information has, maybe it isn't worth the risk.

Sell them, obviously. The fact that we are even talking about this issue reveals that TechCrunch is eager to show off that they know in advance!

It can always be considered as "I got this info from TC, never mind my insider trading"

This apparently resulted in a very distinct blip in $SNAP: https://twitter.com/TheStalwart/status/1186740313081159680

Not necessarily, in after hours waiting for earnings can be extremely volatile but generally it's very low volume so not important.

It's funny to see someone sell all the way down from $14 to $12 regardless of the volume. Whoever had that bid in at $12 must be laughing their ass off.

Whatever investor relations person authorized this — embargo or not — almost certainly just got fired.

Any lawyers speak to why it would even be legal to give journalists earnings numbers before they were public, even if they were under embargo?

There is debate on how often companies provide raw earnings ahead of time: https://twitter.com/tomgara/status/1186741657351413761

Seems silly for the SEC to allow that. A media embargo isn’t something legally binding...it’s more like a gentleman’s handshake AFAIK

If there’s an accompanying NDA then it is legally binding. Same thing happens with the Fed, EIA, USDA, BLS, etc

I don’t think that’s how media embargos work, meaning no signed NDAs. It’s usually just a journalist telling a company rep a verbal “yes I agree to the embargo”.

Verbal agreements are very much legally binding, especially if it is in writing (e.g. over email).

Not a lawyer, but I thought that one element of a binding contract (at least in the common law Anglosphere) is that the parties must intend to create a legally binding relationship - i.e. if two friends agree to each do a favour for each other, and one of them reneges on their promise, the courts won't hold that it's a contract because in general if you ask a friend to do a favour for you, it's not understood to be a formal legal relationship.

I wonder how that applies to embargoes that don't come with formal NDAs or whatever.

I worked for lawyers that did a lot of contract law. It can vary from state to state (in the U.S.) but the state I worked in a verbal agreement -- not even written down -- is legally binding. Proving a non-written agreement can be hard in court but that is a different issue.

Not disagreeing - I didn't say a verbal agreement isn't binding.

What I'm saying is that a verbal agreement is binding if there's an intention to create binding relations, and not binding if there is not that intention.

There is a relationship formed though, 'we will provide you this information early on the condition that you release not before a date and time we specify.' They both get something valuable from each other, the outlet access to write a better article and to publish sooner when it will get more traffic and the company gets their earning in front of more people.

Did you seriously write this?

This doesn't contribute to conversation at all and seems to be implying something that's incorrect. Verbal agreement (e.g. even telling someone out loud "I agree to do this for you for $10") is a form of legal contract. Enforceability/provability is a different story but legally that's a contract.

> seems to be implying something that's incorrect

I think they were referring to the contradiction of "verbal agreement... especially if it's in writing." But yeah, the snarky comment does not help anybody with anything.

An agreement in writing is usually a verbal agreement, so it's not even wrong. Perhaps someone meant to contrast an oral agreement with a written one.

> An agreement in writing is usually a verbal agreement

A verbal agreement inherently means there's no written agreement. Also, oral = verbal.

That's incorrect. Legally, verbal primarily means using words. The technical difference is whether an agreement is written or spoken/oral.

FYI = Agreements are either written or oral (spoken).

Verbal just means using words.

A verbal agreement in law is almost always a spoken one.

https://thelawdictionary.org/article/the-law-of-verbal-agree...

That site can't even render HTML properly, and verbal means using words. That's the primary definition: https://www.dictionary.com/browse/verbal

Of course agreements are using words. How they express those words (orally or written) is the difference. Here's are better answers from actual lawyers: https://www.quora.com/What-is-the-difference-between-oral-an... and https://www.quora.com/Is-there-any-difference-between-an-ora...

> That site can't even render HTML properly, and verbal means using words. That's the primary definition: https://www.dictionary.com/browse/verbal

There exists separate legal dictionaries precisely because words take on new meanings in a legal context. Searching "verbal agreement" brings up numerous legal blogs and sites discussing what you are calling "oral agreements". They are likely interchangeable in a legal context.

"Companies can use social media outlets like Facebook and Twitter to announce key information" but Investors must be alerted[1].

TechCrunch may not qualify under this.

[1] https://www.sec.gov/news/press-release/2013-2013-51htm

It applies to websites too:

The SEC’s report of investigation confirms that Regulation FD applies to social media and other emerging means of communication used by public companies the same way it applies to company websites. The SEC issued guidance in 2008 clarifying that websites can serve as an effective means for disseminating information to investors if they’ve been made aware that’s where to look for it.

(in the same document)

Isn't that referring to publishing earnings on the company's own website or social media they control, not on independent publishers like TechCrunch?

It could be TechCrunch but investors would have to have known in advance that's where the numbers will be published.

Why wouldn't it be legal?

Why wouldn’t it be legal?

Why is it legal for your accountants to know the numbers, before they go public?

Consider the journalists publishing the information as an extension of the accounting department. Specifically, they are the part of the extended department that announces the numbers.

And yes, the SEC loves to prosecute people for suspiciously shorting stocks, right before earnings release.

>>Consider the journalists publishing the information as an extension of the accounting department.

Well, they are not. And accountants can face penalties from lawsuits, losing their license, to jail for revealing client info, unless directed to.

Journalists trading on insider information can go to jail just as easily as accountants.

DAU up 13% year over year to 210M. I thought Instagram Stories had flattened Snap's growth. Does anyone know if the growth is a result of changes to the product?

They did redo the android app sometime earlier in the year, it's very likely that is playing a factor.

Over 80% of the new acquired users are international, not the in the US, where the percentage of Android is much higher. So it's definitely having an impact.

The downside for most social networks is that the revenue generated from non-US users is much lower than US.

Does anyone know if this is standard practice worldwide? Or is it US only? How on earth do these numbers be handed to reporters before hand? It isn't about having NDA or not, It shouldn't even be allowed in the first place.

This is going to be controversial opinion. I could trust lawyers, and Accounts to be professional, but Journalist? So we could give the results to anyone who wants it early as longs as they sign a NDA and dont trade with the information?

Public companies are full of employees that know insider information. An upcoming roadmap by the newest hire can be enough to predict news.

Sensitive data isn't a problem. There are plenty of rules and processes with NDAs, especially in news publishing which often have scheduled stories under embargo. Also the companies are dealing with the news organizations who would vet and assign the proper journalist. I doubt you would get this info by claiming to be an indie blogger.

I wonder how much of this was just somebody fat-fingering a "Publish Now" button instead of a "Save Draft for the scheduled publish later" button. (And then getting fired over it.)

I'm reminded of the hawaii nuclear alert ui, and I know I've built my fair share of not-great-to-use quickly-coded admin UIs over the years.

I don't think the issue is the fact it was published early, i think it's more to do with having the numbers early.

As i'm sure you know reporting restrictions are heavily regulated, a random tech editor shouldn't have this data before investors.

Cue the SEC insider trading investigation in 3...2...1...

It's fine to release numbers online, through generally available media like Twitter or Facebook.

Techcrunch doesn't cut it. That means at least one person (i.e., at Techcrunch) got the information before the rest of the public (meaning anyone not at Snap).

There is nothing wrong with this. Plenty of people have the info before it’s released (under NDA/embargo). Being one of these people AND trading on it before it’s released is a different story.

Ok, so TechCrunch violated whatever agreement they had with Snap. What is the consequence?

Nothing, for TC.

For Snap? A fine and a binding agreement not to do this again or else to designate TC as one of their preferred methods of disclosing financial information (like Elon's twitter is for Tesla).

Shareholders on the wrong sides of trades today can also sue Snap and have a good chance of recovering any putative losses. This is actually the bigger concern for Snap since this is likely a much bigger amount than any potential SEC fine.

I wouldn't say nothing for TC. Breaching embargoes is a very big deal in journalism and incidents like this greatly affect a publication's reputation. They are definitely not getting any such briefings for a while now.

I would say that is pre-2016. After 2016, journalism as a profession became extremely fast and loose. A "we'll apologize if we're wrong" approach took over, plus zero accountability or consequences for false information.

On the bright side, the SEC will eventually ask how this happened. Not that they do any serious enforcement these days.

Well they had time to prosecute a first year investment banking analyst who made $100k trading on insider information a few months ago and just this week did the same to another Goldman Sachs banker. I’m positive both resulted in gains much smaller than the losses some people sustained by this mishap.

Agreed, but I was only looking at it from a legal perspective.

TechCrunch might not be trusted with embargoed data. That's bad for their business, depending who decides to keep them in the dark from now on.

Techcrunch doesn't have a problem, they did exactly what they were supposed to do: publish the information immediately.

The problem is that someone at Snap did not do what they were supposed to do. Rather than a broad disclosure, they made a limited one, which had a noticeable affect on the market.

And this is exactly the type of failure that the SEC likes to police. It's like to result in a small fine and/or binding agreement for Snap to broadly disseminate financial results in the future, rather than leaking financials to favored journalists.

> Techcrunch doesn't have a problem, they did exactly what they were supposed to do: publish the information immediately.

Do a little research into “embargo” in regards to news media and you’ll understand it’s a very very common thing.

People who aren't lawyers have an inflated sense of the legal consequences of breaking an embargo.

The damage to TC is reputational, if that. This isn't the first embargo TC has broken and it won't be the last. If anything, they've developed a reputation as the place to send leaks to.

There is virtually no impact to TC, outside they likely won’t get embargoed content from that source for a while, if ever. Also, TC will still get the article after it hits the wire, they aren’t exclusively in the breaking news category desperately trying to always be “first”, so a slight delay isn’t probably a deal breaker for them.

This is probably part of the reason embargo leaks aren’t that unusual.

I don’t see how this is insider trading.

Someone provided confidential information to an external party. Trades for large gains were made before the information was made public through appropriate channels.

There is enough for an investigation. Whether it leads to criminal charges is a very different thing.

I guess my issue is that once it’s published by TechCrunch, it doesn’t feel like it’s nonpublic anymore.

If someone at TechCrunch were to trade on the information before releasing it then I guess that would probably count (and it certainly would breach whatever NDA there was). Similarly for someone who passed information on to an accomplice.

But just the article being released a bit early doesn’t really feel like insider trading (at least in the US). If a draft of the article were left in a coffee shop and someone found it and traded on it that wouldn’t be insider trading. And that situation feels a lot more nonpublic than this one. I don’t really see how TechCrunch would plan to gain from releasing their article to everyone at the same slightly early time.

Naturally it feels unfair but insider trading isn’t really about fairness in that more general sense.

That would be if the SEC was on top of their game and investigated every public mishap.

Doubt the SEC will do anything in this case.

There has to be a trade for it to be insider trading.

But but but ad revenue.

The numbers are positive, so if anything, this is an elaborate marketing campaign.

I find the fact that it s 2019 and accounting is still stuck on this parade of "quarterly" numbers baffling, especially for tech companies. And on top of this, investors will pretend they couldn't have known until the "sorcerers" release their "secret". It's like fukin middle earth .

The one (1) guy who runs nomad list all by himself, reports his earnings daily. Surely it can't be THAT hard

https://nomadlist.com/open