U.S. SEC Wins 'Shadow Insider Trading' Trial

It is a good decision. He traded on insider information, he should not be able to get off because he tried to be clever and traded a different company’s stock.

Some observations. That guy must be a very decisive (or impulsive) person. He heard the news and decided on the alternate stock trick, found an alternate stock, found a suitable option on that stock and executed the trade all within seven minutes. Perhaps the merger was in the works for a while and he had been thinking and planning this for a while and just pulled the trigger when he heard the merger was approved.

Also, hners should know that they are getting a lot of value by reading that article. Apparently it was written by a team of eight lawyers, seven of which are partners! Considering the billing rates of toplaw partners, this humble article may easily represent 10k dollars of billable time!

IANAL but some clarifications people might find helpful.

An "interlocutory appael" is when the proceedings are stayed until the appeals court rules on a particular matter. During trial a judge needs to give leave to an interlocutory appeal, generally speaking.

It's always worth adding that appeals courts generally deal in matters of law not findings of fact. Trial judges make rulings on the law in the service of finding facts. A consequence of this is that verdicts aren't appealed, which a lot of people seem to think. You can't just appeal a guilty verdict because you don't like it. You need to find a basis, being where (in your opinion) the judge misapplied the law that had a material impact on the case.

Lastly, related securities are a common theme in investing and trading. For example, someone might buy Exxon and short Chevron. Why? Both companies move to some degree in relation to the price of oil. So you've effectively removed that variable. Now you're betting that Exxon will outperform other oil producers (Chevron in particular).

So this does seem to be anovel interpretation. I agree with the decision but it wouldn't surprise me if appellate courts end up gutting this interpretation.

Has anyone who's bought short-term out-of-the-money options and made money ever NOT gone to prison? That is my main takeaway from all this.

The guy only earned $107k. I understand it’s their job to enforce the law but the SEC really seems to only go after small timers.

It seems to me (not a lawyer) that the definition of non-public in the jury instructions is a strong grounds for appeal. (Based on the summary of the instructions in the article.)

It's amazing that they caught him and he got what he deserved but there's one thing that worries me...

We're talking about a petty $120K in profit for Panuwat according to several sources:

https://archive.is/SGklv

How comes the SEC can even find something like that?

$120K in options trading win/loss is nothing. Peanuts.

It's also quite wild that this one is the case we hear about. There's obviously actual insider trading ongoing with proper amounts and not this $120K non-news event.

So how comes they even found him and how comes it's that minuscule, ridiculous, amount that gets reported and published everywhere?

On a big equity or index, $120K can be a single option contract on a 5% move in a single day (OK, 5% moves in a day aren't the most common but still).

And AFAIK there are millions (tens of millions?) of options contract exchanging hands daily.

So, well, $120K... To me it's just seriously WTF?

The biggest no-no for trading is when you get information about a tender offer, that being one company buying another. Even if you're in the bathroom and you hear the guy in the next stall over talking about it on his phone you're not supposed to trade on that information because everyone knows that a potential tender offer is material non-public information.

I don't know how the courts can decide on any verdict about any case when nothing makes any sense.

The entire economy is a massive government-centered money laundering scheme. Citizens of nations are burdened with trillions of dollars of debt that can never be repaid. On the flip side, corporate stocks are pumping almost indiscriminately due to money printing. We have a class-based system that is literally based on how much stolen/laundered capital you have accumulated.

It's weird how some types of stealing is allowed but not others. How does society decide what kind of stealing is OK?