Privileged information or playing on the stock market with the marked cards

Playing with marked cards is cheating.

And in the stock market there are a few.

Inside information is an evil endemic to the market.

Someone gets a tip and benefits from it.

Insider

, as this operation is known in jargon, is one of the priorities of market supervisors.

It is relatively easy to prove that you are trading with a tip (sudden rises in the price of a company accompanied by a lot of trading volume moments before the announcement of a relevant event), but difficult to prove if there is no smoking gun to certify the crime.

The American stock market police, SEC for its acronym in English, collects on its website with hair and signals those cases of privileged information that it has been able to demonstrate.

It is a kind of warning to navigators: we watch you and we can get to the smallest details.

These are some of the latest cases of cheaters on Wall Street:

The FBI agent and a 'rolex'

FBI agent Seth Markin and his friend Brandon Wong earned $82,000 and $1.3 million respectively from Merck's purchase of Pandion Therapeutics in February 2021. Markin knew in advance that this takeover bid was going to happen thanks to to some documents he read at the home of his girlfriend, who worked as a lawyer for Merck.

He passed this information on to Wong, who immediately bought Pandion shares, which rose sharply when the deal was made public.

In compensation for the tip, Wong presented Markin with a rolex watch.

Shady business of a former congressman on the 18th hole

Stephen Buyer was a Republican Party congressman representing the State of Indiana.

When he left politics in 2011, he created a consulting firm that provided services to T-Mobile, among other clients.

In 2018, Buyer shared a golf game with a senior manager of the telephone operator, who confessed to him that the company planned to announce a purchase offer for Sprint.

With this information that was not yet public, the former congressman collected a good package of Sprint shares.

A year later, Buyer struck another blow with insider information from another client about Navigant Consulting's purchase of Guidehouse.

In total, the SEC estimates that with both maneuvers a benefit of 1.5 million dollars was noted.

Greed around cryptocurrencies

Ishan Wahi worked at the Coinbase cryptocurrency buying and selling platform.

From his position he had information on the new digital currencies that were going to be admitted to trading.

Although the company described the data as sensitive and asked the employees for confidentiality, Wahi ignored it and leaked the names of the new admissions to his brother and a friend of his.

Normally, when the arrival of a new cryptocurrency on the market was announced, the price of the rest celebrated it with increases, as it was a sign of the strength of this new market.

With this pattern in mind, Wahi's brother and friend took positions in cryptocurrencies and then quickly sold after the news was confirmed.

In total, capital gains of 1.1 million dollars were distributed with this operation.

Go gold with pizzas

In the accounting department of Domino's Pizza there was someone who knew too much.

Thanks to the information he handled, Bernard L. Compton drew up a detailed plan for five years with which he scored a profit of $960,000.

From 2015 to 2020, the fast food chain's accountant knew whether the results the company was going to publish were going to surprise or disappoint the market and took bullish or bearish positions in the days before Domino's was accountable to the market.

In order not to leave a trace, Compton divided the operations through seven accounts, some of them his and others that were in the name of relatives.

His detailed plan, however, did not end well.

A chat always leaves a trace

Inside information did not rest even in the darkest days of the pandemic.

Hari Sure, Lokesh Lagudu, and Chotu Pulagam were software engineers at Twilio, a San Francisco-based company specializing in

).

Thanks to the position they held, they had access to the company's databases where future income was projected.

In March 2020, when the covid-19 spread throughout the world, they verified how the company recognized in its internal documents that it had noticed a strong increase in the demand for its services by customers due to the mobility restrictions that governments imposed.

In a shared chat, the three engineers acknowledged that with that information, Twilio's shares "would go through the roof."

Days later they bought options on the company's shares through their own and family accounts with which they won a million dollars after the presentation of quarterly results.

lab money

Daniel Catenacci is a college professor from Chicago who has signed a consulting agreement with Five Prime Therapeutics pharmaceutical company.

Thanks to this collaboration, he had access to the promising results of the medical tests with Bemarituzumab, the star drug against cancer that the company had in the study phase.

Despite the confidentiality agreement that he had signed, Catenacci could not hold back and after hearing about the progress of the antitumor he bought 8,700 shares of Five Prime Therapeutics.

When the market learned of the good progress of the clinical trials, the company soared 300% on the stock market in that session.

The next day, the professor sold the securities and amassed a capital gain of $134,142.

A script for Netflix

Subscriber data is the vault key on which the business plan of any streaming company is based.

Sung Mo Jay worked as an engineer at Netflix between 2016 and 2017. He had first-hand information about the evolution of the ups and downs that the platform accumulated each quarter and he was supplying it to a brother and a friend.

As Netflix's earnings release approached, they were taking stock positions if subscriber data was good or shorting if customer performance was going to disappoint the market.

In total, they amassed capital gains valued at three million dollars.

Subscribe to continue reading

read without limits

Keep reading

I'm already a subscriber