Inside Information and Kodak Stock
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Is that "insider" trading? Or is that "I follow News 8 WROC Rochester on Twitter" trading?
If I remember correctly, 2 things need to be proven: 1) someone shared non-public information they shouldn’t have, 2) there was some consideration (money, etc) given for such information.
So there are cases where #2 becomes the issue because no money changed hands. Then the argument can get weird where the argument is “he offered the insider information in exchange for friendship”.
Morally, it depends on your ethical framework. I don’t think insider trading that doesn’t fit the definition of illegal insider trading is immoral, not because it’s legal but because the legal definition is pretty robust as to align with moral culpability.
This is 100% dead wrong. Research the phrase "remote tippee".
I went to a Kodak Developers Conference in 2001. Even back then it was obvious they were struggling to find a way to remain relevant in a digital age. It struck me then that they were doomed, since their business was built on getting a cut from every picture taken. Nothing in digital was ever going to replicate that revenue stream.
"Steve Sasson, the Kodak engineer who invented the first digital camera in 1975, characterized the initial corporate response to his invention this way:
But it was filmless photography, so management’s reaction was, ‘that’s cute—but don’t tell anyone about it.’"
https://www.forbes.com/sites/chunkamui/2012/01/18/how-kodak-...
Kodak was indeed an important player in the early digital age. But I think they made a mistake in thinking they could pivot to a 'similar' business model instead of making the hard choices to really change.
By the mid 80s with the advent of the VCR in people's homes it should have been obvious that their business model was not sustainable long term. Heck, Sony's original Mavica was from the first half of the 80s!
Something to consider about most of the camera makers that have managed to survive; most had SLR brands, and Lens lines to go with them. Kodak, on the other hand, focused mostly on 'point and shoot' type cameras where accessories and future revenue generation is nonexistent (except, of course, film and those disposable flashes...)
I remember Kodak's whole schtick with the photo printers, paper, and whatnot. The cameras themselves weren't bad. What went wrong (again, IMO) is that they missed that the writing was already on the wall for printing photos. By the mid 90s, PDAs were becoming a thing, Laptop computers and larger color LCDs were becoming more and more usable, Cell phones, while not ubiquitous, certainly were real technology.
While this is said with the benefit of hindsight, but I do wonder if anyone there considered that as soon as display and mobile technology improved enough to warrant printing photos not worth the time/effort, their new model would have fallen apart.
In 2001 it was obvious that they were pinning their hopes on everyone still printing pictures. The technologies they were pushing were related to printing, but they couldn't see that printing was a dead end.
Edit: Or use satellite images to see when companies are receiving big shipments, sending out deliveries, or track customers to predict stock prices and revenues https://www.theatlantic.com/magazine/archive/2019/05/stock-v...
https://www.google.com/amp/s/www.bloomberg.com/amp/opinion/a...
There's a reason he says don't take anything as legal advice.
Guy works at a rail yard, he notices that they are spending a bunch of time doing an inventory of equipment and then a bunch of guys in suits keep visiting. He assumes someone is buying the company, so loads up on stock and so does his family.
Company gets acquired and the SEC charges him with insider trading. I believe he was convicted (nope, went to jury trial), but appealed and won.
His argument was he had no more access to this information than the general public would (say from watching the yard outside the gate).
Edit: found it!
https://www.jdsupra.com/legalnews/two-thoughts-about-the-jur...
Acquitted after a jury trial.
I bet it’d be easy to train an image tracking model to find this off satellite imagery.
https://www.cnbc.com/2019/04/30/a-corporate-jet-revealed-buf...
Clients can then get historical imagery of a target location to track daily developments (for things like deforestation, crop health, etc.).
Zuckerberg first said he wasn't aware of the situation being referred to (an old free VPN app that FB allegedly acquired to use for data harvesting); and then later asked to correct his testimony saying something along the lines of that he does remember, but the name of the app used (in the question) wasn't familiar to him so he had needed his memory jogged (presumably by an off-camera lawyer while he was muted).
I wondered whether it was intentional - claim ignorance to avoid the hard questions then fix the record later to avoid perjury while also avoiding follow up questions...
Edit: since parent wrote "data from millions of businesses" I should clarify that I don't have knowledge of what data FB are accused of harvesting, I think the idea was that it was data from consumers giving them a competitive advantage in considering what companies to acquire.
There's plenty of precedent for this kind of behavior: Comscore buys traffic data from ISPs and sells the aggregated insights. Supermarkets count sales and create in-house brands to compete with the vendors they sell products for.
So what are the costs?
The cost to society of someone picking up a dollar bill is the energy expended in the action. I'd estimate 0.2 calories,[1] and about 3/4 of a cent per calorie,[2] which means about 0.15 cents total.
The cost to society of nobody picking up a dollar bill is the cost of printing a new one, about 7.7 cents.[3]
So I guess picking it up is about 50 times better, and given the moral principle that one should do what everyone should do, or vice versa, therefore I would.
[1]Stretching is about 150 calories per half hour; sitting is about 40 calories per half hour; 110 calories per half hour is 0.2 calories over ~3 seconds. (https://www.livestrong.com/article/438404-does-stretching-bu...)
[2] Americans spend $10-20 per day on food; 2000 calories is a reasonable amount (although Americans average substantially more). (https://www.ers.usda.gov/data-products/ag-and-food-statistic...)
[3]https://www.google.com/search?q=cost+of+printing+a+dollar+bi...
How do you decide when to apply this kind of thinking?
For example, if you believe I'm making poor use of my car and you think you could do more good with it, does that make it OK to steal it, on the basis that humanity still has the same number of cars and now one of them is being used more effectively?
I'm not saying it's wrong to pick a dollar up off the floor, just that I'm not convinced the reason it is OK is the reason you gave. I think the reason it is OK to pick a dollar up off the floor is because that dollar basically belongs to nobody at that point.
Casey Neistat has a good video on this topic: The Ethics of Stealing a Bike ( https://www.youtube.com/watch?v=wW6gGyfxn1U ) where he argues that it's never OK to steal someone's bike, but it is OK to steal "nobody's bike", i.e. a bike that has clearly been abandoned.
I think that one should be skeptical of one's own rationalizations for something like that, and also consider all of the costs to everyone. Even if a law is unjust, the machinery that enforces it is going to use resources when the law is flouted. Even if there was no enforcement, any precautions against theft are going to have a cost. Lack of trust has profound effects indirectly.
In the US, if you get information, it’s “public” (or at least you can trade on it) unles you explicitly agree to keep it private (e.g. by signing an employment or other contract that includes “trade secrets” or “non-disclosure” clause). For example, Marc Cuban was sued, and won, after he traded stock after being told some “material information” but not agreeing to keep it a secret (he wasn’t even asked, IIRC).
On the other hand, in the EU, you’re supposed to know which information is non-public, so if you learn something potentially secret, you’d have to confirm that it’s actually public before you can legally trade on it.
My understanding is the same as the parent post. You are assumed to know what is private information and what is not. A number of things are considered to be explicit markers of "public", e.g. the information is available on a platform that is freely accessible to anyone. In case of doubt, recommendation is to ask a local compliance officer.
So in summary, you are supposed to know, or to have the means to know (through compliance dpt). Anyway, if working in finance, there's a 99% chance you have to pre-declare and get approval for your single names stock purchases, and are subject to a minimum holding period.
The definition of "public" does not even account for the degree of "annoyance" to retrieve the information. For instance most pre-earnings disclosures of companies are made through phone calls between the company and analysts, and this is considered public information as well (audio files are often released on the company website) , though you will agree that this is definitely harder to access and interpret than Twits. Which is why there is a whole segment of data providers selling raw transcripts and NLP sentiments results of these calls.
You can safely bet than anything you have access to on the public internet is public.
What it is, though, is a Reg FD violation [0]. Kodak will likely get investigated and fined by the SEC.
You can look at Reg FD as the flip side of insider trading laws. Inside information is not meant to be leaked from the company to traders. If it is leaked and it's the trader's fault (he stole it or paid someone to steal it), that's insider trading. If it's leaked and it's the company's fault, it's Reg FD.
[0] https://en.wikipedia.org/wiki/Regulation_Fair_Disclosure
Or can both sides get prosecuted, with one being an accessory to the other's crime?
If you didn't know him and he didn't know you (let's say he got drunk and let it slip when you were driving him in your cab), that's OK for you, not for him.
If you were his wife or his partner in another business or his golf buddy or his therapist, that's generally not OK for you. It also would be illegal for him (I think) since he explicitly told you to trade on the information, but if he just said "things are really busy at work, we're getting a big government grant tomorrow" and there was some expectation you could keep a secret, he might be safe.
Acting on information that is not public knowledge for your benefit is insider trading, regardless of where/how you received the information, and would be a violation.
Acting faster than everyone else on public information is not; this is essentially what day traders are trying to do.
>> we're getting a big government grant tomorrow" and there was some expectation you could keep a secret,
If you buy stock on a public market based on this information, you're not really keeping a secret, are you?
This just isn't correct. In the US, you need to have a "relationship of trust or confidence" with the company in order to be insider trading. Don't take my word for it, here's the SEC [0]:
> Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, on the basis of material, nonpublic information about the security.
And here's the case law [1]:
> a tippee cannot be held liable unless the Government proves that the tippee knew both (i) that the initial tipper breached a fiduciary duty in disclosing material nonpublic information in exchange for a personal benefit and (ii) that the tipper had received a personal benefit for divulging the information.
> If you buy stock on a public market based on this information, you're not really keeping a secret, are you?
No, and you're insider trading. But if you could reasonably have been expected to keep the secret, the leaker is off the hook. I'll let you look up the precedent for that yourself. Like I said, I'm not a lawyer, and not pretending to be one, but I do know a thing or two about this area. If you are a lawyer, consider asking your law school for a refund.
[0] https://www.investor.gov/introduction-investing/investing-ba...
[1] https://www.proskauer.com/alert/second-circuit-clarifies-ele...
Even if the information appeared in a paid subscription publication it is considered public as long as anyone could subscribe to it and it's not prohibitively expensive.
Source: I have enjoyed many many compliance training sessions.
That fact isn't important in the slightest.
> this is wildly incorrect bordering on fraudulent; at worst, it's insider trading.
It's wildly incompetent behaviour by Kodak, sure, but at worst it's a Regulation FD violation. (Even that would be a bit surprising.)
It's certainly not insider trading based on what is currently known or even what's been reasonably speculated.
He's very much an advocate of selling if the situation warrants it.
He frequently sells stocks and doesn't need the money. He dumped his airline holdings (he owned 10% of all the majors) during the pandemic while sitting on ~$130 billion in cash. He sold a large chunk of Wells Fargo recently (a stock he has liked for a long time). He previously bought and sold Oracle, IBM, Walmart, and so on. He has made several mistakes messing with oil companies, including a bad one with ConocoPhillips in 2006 before the commodity bubble crash.
Buffett is always willing to sell, under two scenarios: 1) he comes to the conclusion that he was wrong in the assessment that prompted the purchase (a mistake on his part, as in Conoco); 2) something substantial changes about the the company or its context for the negative (or otherwise in a way that he isn't able to understand, something outside his lane).
Just rank incompetence from Kodak.
The Government gives a penny stock a loan bigger than it's market valuation.
Trump is known for trying to influence stocks.
It's pretty easy to put a and B together. Trump was pleased to announce it on Twitter ( as usual).
https://theweek.com/speedreads/840126/trump-might-have-repor...
I remember an article from 1987 that mentioned that traders were starting to ignore Trump because of market manipulation ( pump and dump schemes). The year was easy to remember since it's my birth year, but couldn't find the link again, will look further.
Something about an old fox...