How SEC Mobile Phones Can Signal an Imminent Stock Price Drop 34
Mobile phone location data has linked site visits by US securities watchdogs to the headquarters of companies with measurable drops in their share prices -- even when no enforcement action is taken. From a report: When insiders sold shares right around a non-public visit by staff from the Securities and Exchange Commission, they avoided average losses of 4.9 per cent in the three months after the visit, according to a study led by researchers at four Midwestern universities. By matching commercially available data with share price moves, the study offers a window into the secretive world of securities enforcement beyond publicly announced cases. It also raises questions about the rules around insider trading.
"Maybe we should be thinking about what the rules are when the SEC shows up," said Marcus Painter, assistant professor of finance at Saint Louis University and one of the authors. The research used geolocation data to identify mobile phones that spent significant amounts of time at the SEC's various offices around the country. They then tracked those phones to corporate headquarters around the world in the 12-month period right before Covid-19 lockdowns led to extensive working from home.
"Maybe we should be thinking about what the rules are when the SEC shows up," said Marcus Painter, assistant professor of finance at Saint Louis University and one of the authors. The research used geolocation data to identify mobile phones that spent significant amounts of time at the SEC's various offices around the country. They then tracked those phones to corporate headquarters around the world in the 12-month period right before Covid-19 lockdowns led to extensive working from home.
Material Information (Score:3)
From all my training, I’m pretty sure that’s already covered by law. It’s called material information.
If you have that you can’t trade legally.
Re: (Score:3)
If the visit is secret and you aren't told about it but you happen to see an SEC agent you recognize getting out of their car, that's material information that nobody can prove you had.
Re: (Score:2)
Re: (Score:3)
No - they wouldn't count as a company insider. However if a company employee saw an SEC person inside their company in a way they could clearly deny (you are sitting at your desk, you look out the window, see them park and then walk inside; nobody saw you see that) then they could get away with it but it would be illegal. If they ever confessed to a friend later and someone got a recording of that confession then they could be charged.
Re: (Score:3)
But that's not want was just described in the summary.
What is described is some clever person or group of persons tracked cellphone geolocation data on the SEC building. They then followed those devices around and if that device went to a company they had stock with, they sold.
So no laws have been broken here. Just people buying location data that's legally being sold and then analyzing that data to decide whether or not to sell some stock. On average, this apparently saved them 4.9% or some such.
Apparently
Re: (Score:2)
It explicitly mentions an insider, which would typically mean a company employee.
Tracking officials (Score:1, Troll)
Re: (Score:3)
The advertising industry takes priority over all considerations of honest, people, the environment and definitely financial propriety. You can buy lists of phones in a particular area and then start to track them because the US does not have proper privacy laws.
Re: (Score:2)
At the same time, the lawsuit Katz-Lacabe, et al. v. Oracle America Inc (Case No. 3:22-cv-04792-RS) was just settled, although Oracle admits no wrongdoing.
According to the class action lawsuit, Oracle tracked web activity, in-store purchases, geolocation and other personal information without consumer consent. The company allegedly sold this information to third parties for advertising use.
https://katzprivacysettlement.... [katzprivac...lement.com]
Re: (Score:1)
You live in an oligarchy with only the bare minimum of comforts and protections to keep you from revolting while transferring most of your productive output value to the oligarchs.
There's a good Princeton paper that covers this extensively.
The Business Plot c. 1920's identified Mussolini, Hitler, and Roosevelt as the Three Fascists who could transform their societies from representative republics into oligarchies.
They lost control but after WWII they set up the CIA to accomplish covertly their ends which we
Re: (Score:2)
How can it not be a crime to track the location of public officials
How can it be? They work for us. We have the right to a whole lot of information about what they do. Unfortunately a lot of it isn't published by default when it should be, so you have to spend money on FOIA requests to get it.
(and other people)
Ah, there's the rub. That's because we don't collectively hold them responsible for allowing that. Too many people don't care.
Re: Tracking officials (Score:1)
Re: (Score:2)
So make they officials visits to business official and public. And stop selling personal device locations.
You can't check up on the first thing without having the second thing, because there are mylar bags in the world.
Re: (Score:2)
Re: Tracking officials (Score:2)
And stop selling personal device locations.
Can't do that. First Amendment rights of AT&T, Verizon, etc. The data belongs to them*.
*IIRC, in or around 1986 (in some telecom act) the ownership of call and location metadata was transferred from the customer to the service provider. AT&T actually took the case to court, arguing the other side of the case. And losing in the Supreme Court, I think. A common tactic in the legal biz. If you want to ensure your legal position, you argue the opposite in court, but with a mouth-breathing, knuckle-drag
Re:Tracking officials (Score:5, Insightful)
I know you didn't bother to read the paper (this is Slashdot after all!), so let me summarize
The researchers had no proprietary access to information. All they had was publically available, anonymous cell phone location data. You can buy this data anywhere, it is the data used to build maps.
What the researchers did is they just used data science to cluster this data by date and time and proximity to SEC buildings. If this phone is almost always in an SEC office from 9-5, then chances are it belongs to an SEC employee. They record that. Then later on, they see 4 different phones, all for SEC employees, all appear to go on a plane, and then show up at a given company HQ at the same time.
What people should be taking away from this reseach is not just about SEC stock price.. it is about *how much information can actually be gleaned from supposedly anonymous cell phones.
Re: (Score:2)
anonymous cell phones.
In this day and age, no one should think cell phones are "anonymous". They are being tracked by governments and the cell companies themselves. Their metadata is being sold to anyone that is willing to buy. At best cell phones are pseudonymous.
Re: Tracking officials (Score:4, Informative)
The Metadata is anonymous. You can see where a given randomized IMEI was at a point in time, but you don't know who owns that randomized IMEI.
The point I am making is that, you don't need to know the name who owns it to gain a lot of insights.
As an example - if I can determine the house that a given device is residing at in the middle of the night, I can probably correlate that with other sources to know who owns that device, or at least narrow it to 2 or 3 people. I can then look at where that device ends up going to work to narrow it to 1.
Data science makes anonymization impossible
Re: (Score:2)
Nothing will happen... (Score:3)
Re: (Score:2)
...because financial services "regulation" is mostly nominal to give the public the sentiment of accountability.
I don't know about that. The SEC averages about one court filing a day. The most recent filing was against the CEO of FirstEnergy.
https://www.sec.gov/enforcemen... [sec.gov]
Re: (Score:2)
non-paywall link (Score:1)
https://archive.is/bvF79 [archive.is]
If the SEC is snooping around just halt the stock. (Score:2)
Re: (Score:2)
If the SEC is just paying a friendly visit with no action taken, 99% of the world won't know or care, and the stock (rightfully) won't be affected.
If you put up a big public announcement "trading halted because of SEC activity", *everyone* will know about it and the stock will drop.
Re: (Score:2)
Sure. Because law enforcement agencies and their minions have never, ever, in the history of law enforcement, decided to liven up a slow or boring day by stopping, stalking, searching, questioning, detaining, arresting, or otherwise harassing, someone who did not, in fact, commit the crime they're claiming to enforce. We should just take their presence as a holy writ that the company they show up at is a criminal conspiracy; this time, the last time, next time, every time. That makes it so much simpler.
So the stock market has been rigged for a decade? (Score:3)
Not insider trading (Score:2)
Leveraging de-identified smartphone geolocation data, we provide new insights into the SEC's monitoring practice
That data is available to anyone with a checkbook from the telecoms. Anyone from investors tracking SEC visits to foreign intelligence agencies identifying secure facilities, their employees and visitors.
If you aren't tracking everyone from SEC investigators to Microsoft execs travelling to scope out their next acquisition, that's your problem.