Peanut's Potent Plethora of Profit

[peanuts]

Peanuts,
Did you see the "Monk" episode where the previously deaf guy was reading lips of the brokerage house ? I think people ended up dead.

------------billyjoe

I missed that episode. Monk is a great show, and you don't really need to know much about the premise to watch a single episode and enjoy it. As long as you know that Monk has "issues" you're OK.

[peanuts]

My pick of the week

For the Portfolio Of The Week thread, I have chosen to take a long position in AEY. This chart explains why. Leading indications show a bull run will take place soon. I have initiated a position at the point where the indicator (fast stochs and MACD crossovers) turned bullish. The target price is $5.55, the level of major resistance. This might be a 13% profit very soon.

Also, the company reports earnings on Tuesday of this week, and they should be good.

[jiesen]

No.

When does the chain end... with the kitchen staff, or with the person who buys a stock before the major announcement?

Wrong. If the information is not public knowledge, then you cannot legally trade on it. I think the chain ends at ABC or Reuters. Once they run it, it's fair game.

From:

http://www.investopedia.com/articles/03/100803.asp

The Law
In August 2000, the United States (US) the Securities and Exchange Commission (SEC) adopted new rules regarding insider trading (made effective in October of the same year). Under Rule 10b5-1, the SEC defines insider trading as any securities transaction made when the person behind the trade is aware of nonpublic material information, and is hence violating his or her duty to maintain confidentiality of such knowledge.

Who Is an Insider?
For the purposes of defining illegal insider trading, a corporate insider is someone who is privy to information that has yet to be released to the public. If a person is an insider, he or she is expected to maintain a fiduciary duty to the company and to the shareholders and is obligated to retain in confidence the possession of the nonpublic material information. A person is liable of insider trading when he or she has acted on privileged knowledge in the attempt to make a profit.

[IIC]

Quote:
Originally Posted by IIC

Are you guilty of insider trading?

...Doug(IIC)

No.

When does the chain end... with the kitchen staff, or with the person who buys a stock before the major announcement?

I believe you are wrong

http://www.sec.gov/answers/insider.htm

Friends, business associates, family members, and other "tippees" of such officers, directors, and employees, who traded the securities after receiving such information.

Now, let's suppose you had originally planned to short XYZ...But after hearing the TIP you didn't do it...In that case I'd say you are not guilty...And anyway, who could prove that?

Book 'em Webs...Doug(IIC)

[peanuts]

Friends, business associates, family members, and other "tippees" of such officers, directors, and employees, who traded the securities after receiving such information....Doug(IIC)

From this legal wording, it seems that the chain ends at the "employee" level... when it says "of such officers, directors, and employees" that excludes a certain group past those people which are directly associated with them, so maybe the chain ends at the my hypothetical wife, because she can tell anyone else, anything she wants... she is not an "officer, director, or employee" She, however, cannot act on the tip, but she can pass it on to whomever she wants...

But, that is just the way I read it. I'm not a judge.

[IIC]

From this legal wording, it seems that the chain ends at the "employee" level... when it says "of such officers, directors, and employees" that excludes a certain group past those people which are directly associated with them, so maybe the chain ends at the my hypothetical wife, because she can tell anyone else, anything she wants... she is not an "officer, director, or employee" She, however, cannot act on the tip, but she can pass it on to whomever she wants...

But, that is just the way I read it. I'm not a judge.

The way I understand it is that if the info is not available to the public (no matter how hard it may be to find) then it is insider trading.

Maybe one of the Pros can clear this up....Dave???

...Doug(IIC)

[peanuts]

The way I understand it is that if the info is not available to the public (no matter how hard it may be to find) then it is insider trading.

Maybe one of the Pros can clear this up....Dave???

...Doug(IIC)

Doug, this is what Jiesen posted:

The Law
In August 2000, the United States (US) the Securities and Exchange Commission (SEC) adopted new rules regarding insider trading (made effective in October of the same year). Under Rule 10b5-1, the SEC defines insider trading as any securities transaction made when the person behind the trade is aware of nonpublic material information, and is hence violating his or her duty to maintain confidentiality of such knowledge.

When has it ever become the "duty" of the general public to "maintain confidentiality of such knowledge" I can understand if the duty to maintain confidentiality lies with employees, but why the general public? That's just lunacy. If the information does get outside of the boundaries of employees, officers, and directors, isn't that knowledge then considered "public"... Why does it have to go to ABC or AP or some other media before it is considered "public"?

[IIC]

Oop's...I missed his post earlier...Doug

[skiracer]

Different time frames in setting up the charts will give a different perspective of the same chart. What may appear one way will be quite different in another time frame. Also the sizing setup of the chart gives different perspectives. I found a big difference in using the portrait, 780, or 900 sizes vs the landscape. The landscape tends to flatten the chart out and sometimes distorts the pattern widening it to much which flattens the line. Also the time frame lengthens automatically as the size increases thus giving a different perspective. Shares have been under institutional accumulation and the A/D line has been trending up. The same exact pattern is now developing as the previous three higher highs which led to lower lows. Maybe it will reverse and hold this time. Average daily volume around 35,000 shares per day. Friday's volume only 8800 so up on much lighter volume hard to go on. PSAR giving a uptrend signal but was last time it tried to break resistance and hold.



H

[skiracer]

The way I understand it is that if the info is not available to the public (no matter how hard it may be to find) then it is insider trading.

Maybe one of the Pros can clear this up....Dave???

...Doug(IIC)

The only time it becomes insider trading or info is when you get caught. Thinking that insider info amonst the hedge funds and other institutional buyers and large banking and underwriting institutions isn't going on or isn't a daily occurance is being naive.

[jiesen]

Doug, this is what Jiesen posted:



When has it ever become the "duty" of the general public to "maintain confidentiality of such knowledge" I can understand if the duty to maintain confidentiality lies with employees, but why the general public? That's just lunacy. If the information does get outside of the boundaries of employees, officers, and directors, isn't that knowledge then considered "public"... Why does it have to go to ABC or AP or some other media before it is considered "public"?

The "public" has no such duty. The problem lies with the trader, or the one trying to profit from NON-public information. If the information is only available outside the company to the cook's sister and his wife, the trader simply cannot legally make that trade. If the news leaks out to the point that he's heard it also from his gardner, brother-in-law, and shoeshine boy, it's probably then public information. If he wants to be sure it's a legal trade, though, he'd best wait until the story has hit the wires.

In short, a broke middleman gossip is not responsible for following SEC rules, but seasoned traders who get tips really should know better, and can be held accountable for breaking said rules.

[jiesen]

The only time it becomes insider trading or info is when you get caught. Thinking that insider info amonst the hedge funds and other institutional buyers and large banking and underwriting institutions isn't going on or isn't a daily occurance is being naive.

This is also true. Thinking you (as an average Joe trader) won't get caught, though, is also being naive. I bet you Martha Stewart never thought she'd get caught. The real pros who know what they're doing will probably get away with it, though. Anyone seen "Lord of War"? I bet there's some truth to that plotline.

[skiracer]

This is also true. Thinking you (as an average Joe trader) won't get caught, though, is also being naive. I bet you Martha Stewart never thought she'd get caught. The real pros who know what they're doing will probably get away with it, though. Anyone seen "Lord of War"? I bet there's some truth to that plotline.

How about this scenario? I have a good friend who works for a brokerage firm. He tracks the biotech sector and talks with a number of people who work in companies within that sector. On a number of occassions he has been told by people that their specific company is doing great this qtr, sales are way up and everything looks great on the fundamental end and that he should buy the companies stock. Is that insider info or just touting the stock. Not quite like the info that Martha Stewart got about Imclone but still info straight from the horses mouth which the average Joe never got.

[IIC]

How about this scenario? I have a good friend who works for a brokerage firm. He tracks the biotech sector and talks with a number of people who work in companies within that sector. On a number of occassions he has been told by people that their specific company is doing great this qtr, sales are way up and everything looks great on the fundamental end and that he should buy the companies stock. Is that insider info or just touting the stock. Not quite like the info that Martha Stewart got about Imclone but still info straight from the horses mouth which the average Joe never got.

That is not specific info and I see no problem with it.

However...on this comment:

Quote:
Originally Posted by skiracer
The only time it becomes insider trading or info is when you get caught. Thinking that insider info amonst the hedge funds and other institutional buyers and large banking and underwriting institutions isn't going on or isn't a daily occurance is being naive.


That's like saying if you are an axe murderer who kills 10 people but you never get caught...Then you are not really a killer?...C'mon Ski.

Naive...Heck, I think it goes on all the time...But you only hear about the one's who get caught....Doug(IIC)

[Lyehopper]

Insider Trading Real Life Case....

Here's one I personally know about.... Roanoke Electric Steel is a customer of mine and also a vendor. I've been doing business with RESC since 1987. I personally know the guys involved in this case. (RESC is now owned by STLD)

http://www.sec.gov/litigation/litreleases/lr16648.htm

There was a "tip" given on the golf course about RESC buying another Mini-Mill and because of this "tip" these dudes profited from buying an obscure LOW VOLUME!!!! steel stock before the buyout deal was announced to the public. They most likely would have never been caught but one of them was bragging to a "friend" about his stock market profit and that they had "inside info".... And one phone call led to another.... And then the feds got involved....