Re: Saw this on CNN: Anonymous Stock tips over IRC as bad???

>Perry E. Metzger writes: 

>> Timothy C. May writes:

Suggestion #1: 
Never get your legal advice from cypherpunks newsletter.

Suggestion #2:
If you absolutely can't resist going against Suggestion #1, 
then listen carefully to Perry.

As just a lowly programmer around here, I have often been told 
that I would be breaking the law if I trade on some piece of 
information before it becomes public.  I am not such an "insider" 
that I must register my trades 90 days in advance.  I've read the 
actual statute. (though I am not a lawyer and, these days, even 
lawyers don't know what a law means until the final verdict)

You might also want to ask Ivan Boeskey(sp?).  I think he's out of 
Federal prison by now.  He's the guy that cut a deal with the Feds 
to give him time to sell a few billion dollars worth of stock before 
being arrested, so that he could pay his fine.  Once he was arrested, 
the value of those stocks fell.  It looks to me like he and the Feds 
traded on inside information so that he could pay his fine for trading 
on inside information.  He still went to jail, and he had enough money 
for good lawyers.  Imagine what would happen to me!








>IANAL, but I think you must be wrong about this, Perry.  If this were
>the case then, as an employee of company XYZ, I would never be permitted
>to buy XYZ stock (which is clearly not the case) since I *always* have
>information that others outside the company do not (about staff changes,
>product plans and such).  I suspect the deciding factor must have to do
>with the ability to execute actions which have substantial direct effects
>on the stock price (i.e. buying a company, declaring dividends, having a
>massive downsizing, etc.).
>
>
>-- Jeff
>

rick hoselton wrote:
> 
> You might also want to ask Ivan Boeskey(sp?).  I think he's out of 

Boesky.

Which brings up another ignorant question: suppose that I am a 
corporate officer who does receive substantial "insider" information,
for example results of audits, before they become public. What would
prevent such an insider from creating a phony offshore trading company,
and sending orders to that company using cypherpunks technology? 

If we suppose that the agent executing trades (which may even be a
computer, afaik) is trustworthy, the methods to deliver trade orders are
reliable, the computers are protected from van eyck monitoring, and the
officer is not spending too much money openly, what is there to prevent
or prove such violations of the law?

For example, the trading computer can have pseudonym address
xyz@alpha.c2.org, forwarded through a chain of remailers to
place_order@offshore.com.xx, and the officer sends pgp signed and
encrypted trade orders to that address, again through remailers.  What
besides traffic analysis is there to stop such violations?

Thanks,

	- Igor.

Igor Chudov @ home writes:
> Which brings up another ignorant question: suppose that I am a 
> corporate officer who does receive substantial "insider" information,
> for example results of audits, before they become public. What would
> prevent such an insider from creating a phony offshore trading company,
> and sending orders to that company using cypherpunks technology? 

Very little. However, there would be a noticable shift in the price of
the stock prior to the public information arriving. This would trigger
an investigation. There would be a very limited number of people able
to get at the inside information, so the pool of suspects would be
small (usually on the order of a dozen people or less), and if you,
say, wanted to spend your money, you might end up being caught.

In other words, anonymity works better when the "crime" isn't visible
to anyone watching the stock market and could be committed by more
than a handful of people.

Personally, I don't object to insider trading, but it can be hard to
get away with depending on circumstances.

Perry

ichudov@algebra.com (Igor Chudov @ home) writes:
> Which brings up another ignorant question: suppose that I am a
> corporate officer who does receive substantial "insider" information,
> for example results of audits, before they become public. What would
> prevent such an insider from creating a phony offshore trading company,
> and sending orders to that company using cypherpunks technology?

If he doesn't report the income from the trades, the IRS may nail him.
If he does, then they'll look at what trades he did.

Interestingly, all this trading on inside information didn't use to be
a crime in the U.S. at one time, and is not a crime in most of the world.
Most non-Americans view access to material nonpublic information as one
of the job perks, just like the ability to sexually harrass one's secretary.

Interested cpunks should check out the book _International Investments_
by Bruno Solnik (0-201-56707-5). It doesn't talk about insider trading,
but it has some fascinating comparisons of market practices in different
countries, and some thoughts on the value of anonymity vs. reputation.

---

Dr.Dimitri Vulis KOTM
Brighton Beach Boardwalk BBS, Forest Hills, N.Y.: +1-718-261-2013, 14.4Kbps

On Mon, 3 Jun 1996 ichudov@algebra.com wrote:

> rick hoselton wrote:
> > 
> > You might also want to ask Ivan Boeskey(sp?).  I think he's out of 
> 
> Boesky.
> 
> Which brings up another ignorant question: suppose that I am a 
> corporate officer who does receive substantial "insider" information,
> for example results of audits, before they become public. What would
> prevent such an insider from creating a phony offshore trading company,
> and sending orders to that company using cypherpunks technology? 

The threat of discovery and punishment?
Your mileage may vary.

> If we suppose that the agent executing trades (which may even be a
> computer, afaik) is trustworthy, the methods to deliver trade orders are
> reliable, the computers are protected from van eyck monitoring, and the
> officer is not spending too much money openly, what is there to prevent
> or prove such violations of the law?

Paper trails, informants, corrupt foreign officials, plants, attacks on 
voice calls between the U.S. and the company, the internal corporate calls.

Anything that law enforcement is used to using.

It'd be the IRS that you had to really watch for.  SEC tends to give up 
on said programs.

I discuss concealing insider trading in my longish work on the subbject 
of asset concealing.

> For example, the trading computer can have pseudonym address
> xyz@alpha.c2.org, forwarded through a chain of remailers to
> place_order@offshore.com.xx, and the officer sends pgp signed and
> encrypted trade orders to that address, again through remailers.  What
> besides traffic analysis is there to stop such violations?
> 
> Thanks,
> 
> 	- Igor.

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