I'm more than willing to believe there's insider trading, but the data presented at the beginning is not convincing.

> Of the 496 trades [Filler has] made since 2014 in Alabama’s ServisFirst Bancshares Inc., where he sits on the board of directors, and Century Bancorp Inc. of Massachusetts, where he’s the largest shareholder, 372 of them, or 75%, have shown a profit three months later.

> Besides Filler, other TipRanks stars include Steve Mihaylo, the CEO of telephone services company Crexendo Inc., where he owns a $60 million stake. Mihaylo has turned a three-month profit on 83% of his trades over the past five years even as Crexendo’s shares have seesawed.

We've also had an unprecedented bull market over the past 10 years. If you pick any random stock at any time and hold it for three months, what are the odds that it will be worth more?

The article compares the returns to the S&P500, but that is the net performance of those 500 stocks. You'd have to compare it to the base rate of picking a random stock to see if it's actually remarkable.

Maybe the S&P 500 performed lower because 75% of the stocks in it went up and 25% went down. But that means that if you randomly pick one stock, you'd have a 75% chance of it being one of the ones that went up, and you'd outperform the S&P500. (Well, not quite, maybe it could go up, but not as much as the S&P500 as a whole. But still, most of the stocks that go up, would have to go up more than the average of the whole index in order to compensate for the ones that go down)

Later in the article, when they mention that insiders tend to reliably sell stock ahead of bad news, that seems much more damning.

It’s worse than that, those tasked with overseeing the market, including Federal officials, are also trading on inside information with impunity, from Pelosi to Powell

https://www.bloomberg.com/news/articles/2021-10-01/clarida-t...

https://www.dailymail.co.uk/news/article-10004691/Fed-Chairm...

The President of Robinhood is front-running customers with impunity.

https://mobile.twitter.com/EpsilonTheory/status/144326659925...

There are regulations but no enforcement except for smaller players within the financial industry.

Remember, you can trade stocks without trading stocks.

What do I mean? Mark Cuban sold a collar on his Yahoo stock through Goldman for $[I forget] billion dollars. That was an off-market trade in which someone bought his entire block off of him. In today’s world, with tons of low interest (as in, single/double-digit basis points) loans and other fun weird contraptions, you have a lot more options to trade without trading.

I have no grand reveal here, but there’s probably an entire “dark dataset” regarding that activity that is missing from this conversation.

Both people involved are now deceased, and while I heard this story from one of the principals, I have my doubts. But fwiw: I knew a guy who was close buddies with the outside accountant for a Fortune 500 company. One of the accountant's duties was to file a quarterly document with the SEC with the company's financial results. That was before this was done online. The contents of the document, before filing, were very confidential and using or disclosing them would have been illegal inside trading. However, as the story goes, the instant the document was in the SEC's possession, its contents were considered public and people with the info were allowed to use it (maybe not the accountant himself because of some special rules).

And so, according to how I was told, the accountant, after dropping off the document and walking out of the SEC building, would pull out his cell phone and call his buddy from the front steps with the relevant info. The buddy would then make trades on the now-"public" info that no one else yet knew, because it was still on a piece of paper in the SEC office that no one had yet looked at.

Could it really have been that easy? This would have been the 1980s or so, I think. I think they had cell phones then, but if not, they had pay phones.

The idea that some people will not use their knowledge to game the system is absurd. I know there's ways of tracking down people via trading patterns but what's to stop an insider selling information to someone completely untied to them and profiting that way? As long as it isn't made obvious by the trader, that would be an untraceable form of insider trading. Maybe we should just demand all information be open.

There was an Addams family episode way back where Gomez was depressed because everything he did would win big. So he decided to dump all of his shares of some stock that he knew was going to go up. And when news spread that he’d done it the stock tanked and he ended up “winning” because he saved so much money by selling before the huge dip. I’ve always thought that was interesting.

> "In two decades the SEC hasn’t brought a single insider trading case involving trades made under a 10b5-1 plan."

Ladies and gentlemen of the jury: the defendant changed his 10b5-1 plan multiple times, and one of those times he profited hugely from it. The defendant's excuse that his advisor told him to do it and he needed the money for his daughter's college is just unpersuasive.

Anyone see why a prosecutor might be reluctant to bring such a case? It might well be true, but the jury may or may not stay awake long enough to agree. Best to concentrate scarce resources on cases you CAN win.

Note that I'm not saying insider trading is harmless; just that it's like illegal drugs: no policies will stamp it out entirely.

"Is the Stock Market Rigged" should become a new answer to obvious questions, similar to "is the pope catholic" and "does a bear shit in the woods".

Nancy pelosi's trading returns beat every well known investor, she is running far lower amounts of capital, but shes averaging 70% a year. Meanwhile, the rest of us slave away at our jobs like cattle, and listen to her speak on TV about "fighting for our rights, justice, equality"

Imagine an alternate reality where all stock holding info is public, with names attached, (Everyone's! Including yours!). There are also no insider trading rules.

Such a system seems possibly fairer and more efficient than what we have now.

Oh it's rigged alright.

How do you think we got that miraculous bounce post-Covid?

The Federal Reserve had to step in with ~$8 trillion and start buying stocks.

Two Fed presidents had to step down recently due to their stock holdings.

They had to do this to save everyone's retirement accounts and the housing market.

And now we have inflation and this will get blamed on the President's policies. It has nothing to do with that, it's this massive injection of cash into the system. They may have gone a little overboard.

They are trying to slowly unwind this. Until then it's "party like it's the 1920s".

https://www.cnbc.com/2021/09/27/dallas-fed-president-kaplan-...

This feels like an extended ad for tipranks.com

Considering that they have been going at the problem for more than half a century, and if anything, making negative progress, perhaps there is a better approach.

How about: make all trades 100% transparent in real time, and nevermind the insider trading laws? If Jack Smith, the CFO of XYZ Corp, sells 300 shares at 11:04:00 AM, you can know about it by 11:04:01. Sure, Jack still has an advantage, but now his trade is ACTUALLY providing information to the market.

It is one thing for TipRanks to provide analysis two days after, another thing for them to be able to do it in almost real-time, or setup a Fast Follower fund...

Seems there's only good to be gained here, and the insiders won't have to worry about prosecution.

I honestly believe the only way out of this would be to stop trading for the general population, by enacting strong regulation. Having all middle-class adults be experts on stocks, NFTs, what new fork some shitcoin is having, etc., is a huge waste, and ultimately funnels more money to the wealthy class, that obviously have information and capital advantages.

If society keeps seeing investing as an absolutely necessary thing for financial stability, we can't expect politicians and executives to not be corrupted.

If you think insider trading is bad, wait til you see what the Federal Reserve board gets to do, all completely legally, in currency markets. They write their own paychecks out of thin air.

Is it really rigged though? The main driver gains has always been information arbitrage. Where the successful investor knows something about the market that noone else does. Nowadays a lot of information is out there and nothing stops you from trading like the Senators. The information out there. Well, it's on finclout at least.

Previously discussed:

https://news.ycombinator.com/item?id=28692640

Does HN allow multiple submissions for the same URL now?

What's funny about this is people thinking it wouldn't be rigged in the first place for some (fantastic) reason. Economy is the new religion.

Cheating at a game does not mean the game itself is rigged.

What about crypto trading? I do think that it is quite rigged, and the whales manipulate and dictate the price action.

Insider Trading is one of the stupid laws I have come across. There is always going to be asymmetry in information.

Obviously..?

What kinda of insane naivety is required to believe the opposite?

Nooo, the American cap markets are unfair? What a surprise.

America is possibly the most self deluded country in the world.

Go enjoy your American dream, the rich people that is.

Matt Levine had a pretty good column on this the other day: https://www.bloomberg.com/opinion/articles/2021-09-29/inside...

His point, which is pretty much impossible to argue with, is that insiders always have material nonpublic information about the companies they work for, so treating “insider trading” as a categorical evil that must be totally eliminated is just denying reality. You would have to bar insiders from ever trading their own stock under any circumstances, which seems silly.

The alternative view is basically “who cares”, and that barring insiders from trading freely actually impedes efficient price discovery. A compromise might be to require insiders to at least publicly disclose all trades, so that markets know when insiders are making moves.

OBVIOUSLY

How can you NOT insider trade once you're a C-level or politician? Your decisions literally change the market.

Unless they pass a law that monitors every single transaction of every person of interest, and even then, I'm sure my RIA would love to know if I had a juicy tidbit and could trivially hide it, I just don't see how you ever stop it.

That world isn't made for the people on HN.

It's not rigged. If you think the stock market is rigged, you'd have to apply similar lens to the factors that influence it like inflation stats, employment numbers, gold and other metals prices, interest rates, and currently, home prices, food and fuel prices, and all the other scientifically collected data that supports policy. Markets are the sum of the information everyone has about prices (even if that's not evenly distributed), and if you could co-ordinate to rig that, you could rig literally anything. If it were even possible to rig any, let alone all, of those things, the whole thing would be as fragile as the narrative that held it together. It couldn't exist. We'd only ever be one viral tweet away from total civilizational meltdown.

I get that connected insiders need more scrutiny and maybe making some high profile examples would set the tone, but that some bad actors don't bring the whole thing down is more of a feature than a bug in this case.