Husband of Amazon employee sentenced to prison for insider trading Amazon stock
justice.gov
justice.gov
>Bohra engaged in illegal insider trading in advance of 11 straight earnings announcements.”
>He and his family members have paid $2,652,899 in disgorgement, interest and penalties.
And 26 months in prison! This is why if you're going to do any kind of trading yourself -- never touch the company you work for.
Some more info on the original SEC filing as well: https://www.sec.gov/litigation/complaints/2020/comp24923.pdf
> As part of the plea agreement, Bohra’s wife will not face criminal charges. Bohra’s wife is no longer employed at Amazon.
The wife (and family) lost 2.6 million, plus her job, and the husband - so it's not like she got away with something, just avoided the worst of the punishment.
They had to pay back their gains, pay additional fees, and one of them serves jail time. They did not get away with anything.
It sounds to me like even giving information to someone if you know that person will trade is illegal.
https://www.investor.gov/introduction-investing/investing-ba...
"Giving someone the data" is probably a different violation to "trading with illegally obtained data".
She probably got a different penalty (breaking NDA or similar) then he did.
An alternative would be to have criminal parents serve time consecutively -- that way noone gets away, and the children would not have to be taken away.
Basically they were able to cough up the $2mm the SEC wanted in the parallel civil suit, and didnt attempt to challenge the criminal case, so the prosecutors in the criminal case chose not to
Women generally get less time for the same crime.
There's a lot of companies out there. It's easy to pick one that definitely won't get you in to trouble instead of one that probably won't get you in to trouble.
not familiar with the whole situation, but I'd worry the company would tell me times that were advantageous for it, not necessarily for me.
on edit: I suppose the downvotes are HNs way of telling me that would be a silly thing to worry about. Thanks for the clarification.
on second edit: thanks for the actual clarifications as to why I would be silly to worry about that kind of thing.
Besides, are there really bad and good times for the company? Its not like the company itself is affected, just the stock holders. Management wants stock to go up because management usually owns stock. So screwing you would also screw themselves.
Last of all, if you dont like the blackout periods, you can just setup an arms length plan to bypass it https://www.investopedia.com/terms/r/rule-10b5-1.asp
My company does this and it is a relief for legal compliance reasons.
Most Senior Execs and the whole Financial division typically fall under these umbrellas.
There should instead be restrictions on the time for an order to go through, not on the act of insider trading.
Err, example please? I'm totally blanking here, not gonna lie.
This is not common. In the story, the guy's wife worked in finance so had confidential info about earnings. The rank and file can trade whenever the hell we want with whatever stock we want, including our employer's. No one bats an eye.
In almost every case, no employees (insider or otherwise) are permitted to sell derivatives (calls, puts), while they are employed.
>As further explained in Amazon’s Insider Trading FAQs, “puts, calls, warrants and other types of option securities” were required to “be cleared in advance with the Legal Department, regardless of whether that employee is otherwise subject to preclearance or to the trading window, even if that employee is not in possession of material nonpublic information.”
Amazon employees require Amazon's Legal approval before trading Amazon options.
page 6, #17-21
These are not stock. You definitely don’t need Amazon Legal approval to trade Amazon stock - otherwise all employees that get RSUs would need approval to sell their stock.
> Amazon employees require Amazon's Legal approval before trading Amazon stock.
Options are not stock, they're options. Employees are generally (maybe always?) restricted from trading in derivatives like options. That doesn't mean they can't trade stock (outside blackout windows).
What stops from former workers at intelligence agencies from starting a hedge fund and employing all methods they learned while at work, to acquire such valuable information, trade based on that and offer others money management services?
That wouldn't be insider trading. Indeed hedge funds are known to use intelligence data like satellite photos etc.
If they use illegal monitoring devices, hacking for info etc, they may fall afoul of federal espionage, wiretapping or CFFA, but it would still not be insider trading.
Thats an interesting point, if I hack the CEO’s phone and get the earnings number a day ahead, then trade off them, I kind of wonder how that isnt insider information.
Although laws around that are so odd, especially in US, that it wouldn’t surprise me.
(not a lawyer, not legal advice)
that would still be trading on material non public information which is prohibited.
Note also that there are difference between US and EU. I think US might require a breach of duty of care somwhere in the chain of responsibilities for insider trading, while EU doesn't.
There isn’t an inherent legal issue here
Insider trading also requires you or the person you got information from to have a fiduciary or contractual duty not to share information
That typically ends after employment or when the NDA expires
There is nothing illegal about having an advantage in the market, if thats the assumption where you are starting from
Some source of that? I believe that is not true. Other shareholders don't really want managers to profit from insider trading.
https://en.wikipedia.org/wiki/Steve_Cohen_(businessman)#SEC_...
It is easier for clueless household members to get a hold of the earnings statement or unknowingly trade AMZN during blackout periods, so in some cases I can see how an honest mistake could happen.
However, this guy traded 1.5M 11 times during blackout periods ahead of earning statements. There is just no way to claim ignorance there. He had to have known that it's illegal.
I can't even begin to imagine the hubris or the stupidity. If they put Martha Stewart in prison for insider trading, they'll obviously put the husband of an Amazon employee without blinking. What was he thinking?
With insider trading the investigation is a DB query. It costs very little to look at all the trades for everyone around announcements and see who was acting suspiciously.
I don't know anything about trading; in naïve view would be that unless they have quite a bit of information about you that's not necessarily all that easily obtainable, it's not always so easy to detect?
As I write this I can imagine a cryptocurrency marketplace for insider information. The insider asserts some fact about a company and stakes an amount in crypto. Buyers see the potential - e.g. "Amazon insider staking 1 million for X% return" and can choose to take on the deal or not. If the buyer does take on the deal they see the information and if the information is borne out then the buyer must return the insider's investment plus X%. Otherwise the buyer gets the insider's stake.
There's a lot of rough edges and potential for abuse, but I can imagine something like this making it hard or impossible to prove insider trading.
We don't have to imagine it too hard, something very similar already happened! https://www.bloomberg.com/opinion/articles/2021-03-22/fake-i...
Wow ! 26 months ! In France he would have been sentenced to 4 or 5 SUSPENDED months.
My parents and some of their friends plans to go to USA for tourism I hope they don't get arrested (pulled over). My dad speaks English "like a Spanish cow" and his attempt at making jokes might not please the officers.
Why do you think that serious white collar crime shouldn't involve jail time.
Regardless, if all I knew about France was what I saw on "various medias", my view of your country would be just as skewed as your view of mine. It reminds me of an immigrant I worked with in the 80s who spoke of how his relatives and friends back home wanted to know if the U. S. was just like the television show "Dallas". Not in Indianapolis, Indiana, it wasn't. Nor even Dallas, Texas itself, I imagine.
It's also why Matt Levine's "rules of insider trading" includes "Don’t do it by buying short-dated out-of-the-money call options on merger targets".
Certain transactions are suspicious as hell, especially when they can look at your trading history and determine you've never really traded much and just opened the account 2 days prior and made a $100,000 bet on the trade. Or for the really clever people, they find out although you made a suspicious trade you don't work for Amazon, but LinkedIn says you're the wife of someone who works in finance there. Oops!
Though I wonder if that rule needs to be updated with r/WSB doing these trades all the time.
https://www.bloomberg.com/opinion/articles/2018-08-12/the-10...
"In fact, when Hand was questioned by Neuralstem about Calice’s inclusion on a list of names that the Financial Industry Regulatory Authority sent to Neuralstem in its review of suspicious pre-Announcement trading, Hand falsely stated that Calice could not have obtained the negative clinical trial information from her."
https://www.bloomberg.com/opinion/articles/2021-06-10/maybe-...
But conveniently, there's a legal document that establishes a relationship with your spouse, so that's really easy to find.
And so it's kind of an extra level of stupid for getting caught...
My wife has a series 7 security trading license. The SEC requires our personal trading accounts be flagged with this information along with information regarding my employer. Any trades I make in my employer's stock take additional processing time (along with standard blackout periods etc). I would assume people with restricted access to corporate financial statements are flagged and tracked similarly by the SEC.
Many Americans think insider trading is l common than. If everyone is getting away with 70 mph, you can too. (Exhibit A: this thread.)
In reality, insider trading enforcement is effective. The SEC looks for unusually profitable trades ex post facto. Their verification is easier than the insider trading. Wall Street doesn’t insider trade because it’s stupid and there are lower-hanging fruit.
I've heard more than a few stories of immigrants coming the states, working tech jobs, and ... getting thrown in jail for insider trading because their stock market worked very very very differently back home. It has gotten so bad that many of the big techs include mandatory training on what inside trading is and how not to do it.
This is impossible to know just like many other crimes.
They do, its just that the CEO does not go to to jail
https://en.wikipedia.org/wiki/Steve_Cohen_(businessman)#SEC_...
Just foolish and overconfident, although the fact the dad was mentioned probably means they roped him into doing the deeds thinking it'd be a connection removed enough.
Two tech salaries between em, and they still got greedy. I don't really understand that, trashed their careers ongoing.
Yes. The 2012 STOCK Act prohibits it.
Edit: blah, nevermind: https://techcrunch.com/2019/10/24/after-its-first-earnings-m...
I guess if he dodged those earnings plays, that would build a good case.
edit: Blackouts include the employee and all family members. You can not trade during blackout periods.
Also, by the way, they were legally not allowed to trade during those times at all, due to her specific job and the blackout period that cme with.
If he had just stuck with stocks, I'm sure it would've been harder to prove. But with options and dates, timing of it... it's hard to get away.
I think they also have separate flags on insider's tax returns to look for any unusual capital gains from market transactions. It's not a trivial problem to make trades in an account completely unrelated to you and then get the illegit proceeds back into your control without tripping some flags.
Also, most of the volume in these stocks are huge algorithmic trades from institutional investors and funds. They also tend to move in herds based on when analysts release new reports or change ratings on the stock. Thus, those are pretty easy to filter out of a search. Unusual trades from individual brokerage accounts are going to stand-out. Especially if those accounts aren't making similar trades in other stocks.
When they get suspicious matches they run them down to see if there's anything there. I used to be an insider at a big tech company and there's quite a bit of scrutiny. You'd have to be really stupid to do that shit. Especially repeatedly with large amounts.
> When they [the SEC] get suspicious matches they run them down to see if there's anything there
Sounds like how casinos ban card-counters.
Also, had he done this once or twice, they might not have found it but 11 quarters in a row is going to get noticed eventually.
What if someone was trading in a smart way, e.g. purpusfully accepting losses on the same stock/derivate, trading during non-blackout periods, focusing on more than one stock excessively. This could reduce the risk for automatic detection. And finally, when you are reviewed manually, you should be able to present some fancy excel models that you pull out your ass to support your "buying decisions" when you made the insider trading moves.
The biggest thing would be, however, to keep your partner in crime at distance so there is not obvious evidence that you spoke about trading.
I wonder how hard it is to outsmart the system and I can imagine that there are many people out there who play it very well.
For the most part I'd not see the GFC as a morality tale but rather a kind of weird emergent phenomena whereby one area of the economy became so big and complex that it was beyond's anyone's ability to manage, and the interactions of the millions of bit players in it - all of whom in their own way wanted to succeed and do well for themselves - led to this collectively disastrous outcome.
Which isn't to say that nothing illegal occurred - I'm not sure how you'd draw a boundary around the GFC but there were a number of securities fraud prosecutions in the years afterwards - but I think if you take the GFC and subtract all illegal behaviour, you'd still have the GFC.
It's pure unadulterated fraud. No one was punished.
I also think your explanation of the GFC overlooks what was an extremely multi-factorial situation. Most explanations would allocate some causality to changes in regulation, changes in global debt dynamics. Securitization aside, it was the peak of a huge borrowing/lending boom not unlike numerous previous financial market crashes.
No that is now true, people wanted to regulate derivatives but Alan Greenspan and others who were in power decided not to.
Was it Bush's status quo? That's not an insinuation or loaded question, I'm just wondering if Bush just perpetuated what came before (from Clinton, or Reagan, or Bush Sr.), and Obama continued in that tradition.
I assume there was more teeth to enforcement of this at some point in the past (I hope), but don't really know enough to know when that would have been.
If he made 11 consecutive trades, he didn't need any insider info, or am I mising something here ?
What is covid insider trading?
> What about the billions Jeff Bezos fleeced in taxes?
I believe Jeff Bezos did no violate the law, but that's really offtopic here.
> It's the rich man's world, where justice is only onto the poor.
Tell that to all the rich guys went to jail.
Or if you have some statistical evidence, I'd love to read it.
Amazon pays quite a lot of taxes, directly and indirectly. It creates jobs, improves infrastructure etc.
Anyway, that's offtopic: whether Jess should be in jail because he violated the law and whether someone should pay more taxes are completely different topics.
>However, on February 13, he and his wife sold between $628,000 and $1.7 million worth of stock through thirty-three transactions and on February 27
> NPR asked Caitlin Carroll, Burr's spokesperson, for a comment on the alleged violations and she responded with "lol"
>On May 13, the FBI seized Burr's phone, to investigate his communications with his stock broker, among other warrants, including one to search his personal iCloud account
>On May 26, the Justice Department announced that it had ended its investigation into Feinstein, Inhofe, and Loeffler.[18] On January 19, 2021, the Justice Department closed its investigation into Burr
Source: https://housestockwatcher.com/summary_by_rep/Hon.%20Nancy%20...
Crowdstrike on September of 2020. I remember I went for it too, and it paid really well once the news the government had been hacked came out.
So this trade underperformed the market by 15%, which seems like it is a horrible trade. Am I missing something? Why did you say she made a killing?
Also, AFAIK there has been no update on whether those calls are still open or closed. They could have sold the covered calls already at a massive profit before the stock started to tank.
Having said that, I really think Congresspeople should be prohibited from trading in individual stocks entirely, and restricted to just investing in index funds, if for no other reason than the PR problem of congresspeople appearing to profit off of their position.
Good luck.
it’s 100% legit to say that any Congressperson who trades stocks unethically should be criticized. but when I saw a deft change of target like this, I was not at all surprised to find you defending Trump in your post history.
I’m partisan too, but let’s keep it above board.
There's plausible deniability for sure, it might've been coincidence, and I'm not denying that.
The pandemic seemed obvious in February; I know dozens (myself included) who bought masks and supplies long before the run on stores, long before even the USG was lying to people telling them not to wear masks (to preserve the supply). The briefings were around then. Were I a gambling man, I too would have shorted airlines then, and I wasn't in any of those private briefings.
The abuse is when they trade and then pass laws affecting the industries. A lot of kerfuffle has been around the covid briefings, but they didn't get anything an observant outsider couldn't see as well.
It has to be nonpublic information to be insider trading.
Indeed, there is a bell curve of "wait-and-see-what-the-others-do".
What nonpublic information about a publicly traded company do you think they received?
PS: email me
There was plenty of opportunity through January and February for "prescient" trading decisions. The main decisions in question are those executed by US legislators immediately following a national security briefing. I'm not saying it's illegal, it's not; but they're assholes for selling after the briefing and still deliberately telegraphing otherwise.
Which isn’t to defend or justify insider trading by Congress. There were intelligence analysis reports floating around Washington DC in 2019, so it was a known risk. But you didn’t need to be a beltway insider to see that possibility when insuring against that risk was very cheap.
The bar for insider trading is hilariously low - this seems like a total waste of time and resources when you could be chasing whales like you should be.
I believe the intent was to provide a chilling effect on regular people at FAMGAN-type companies who may have some access to insider information and were perhaps toying with the prospect of acting on it.
That's what the Bohra's thought!
It's what a lot of insider trading criminals think. They think the SEC has "thresholds" and only go after "whales". They don't, they look for patterns and go for it. Low hanging fruit is irresistible for them, it's not a "waste of resources."
What's ironic is the that typical insider trading criminals are well-compensated exec level staff. These people pull in Nx100K total comp. The thing is, at those level their peers have wildly variable net-worth. Some come from dynastic wealth, others clawed their way up from ordinary backgrounds. Tragically the ones who clawed their way up tend to suffer from envy when they look at the toys some of their old-money peers have-- they end up looking for "shortcuts" to keep up with the Joneses. Envy can lead to ugly things.
So you think if someone earns 50 bucks for beer with insider trades each year, they will go after them? I mean why not, but I guess there has to be a line somewhere.
The people who do insider trading, however, do it for greed. 50 bucks once a year isn’t going to cut it for them.
Yes.
> this seems like a total waste of time and resources
I'm willing to bet that the investigation and prosecution cost less than the ~$1.2 million in excess fines Bohra had to pay. Not really a waste of resources if it's a profitable endeavour.
I've personally never considered a million dollars a low-ball figure.
It is not just random million dollars trade. Money are not created out of thin air, money are taken from someone. In this case, money was taken from Amazon shareholders. 0.000001 of each shareholder approximately.
Generally, insider trading hurts trust in financial system, and when it happens unpunished, each american citizen is hurt.