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Husband of Amazon employee sentenced to prison for insider trading Amazon stock (justice.gov)
234 points by catillac 13 days ago | hide | past | favorite | 227 comments





>he obtained from his wife, an Amazon finance employee, to place trades in Amazon stock–making a profit of $1,428,264

>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


He blatantly traded those 11 times during blackout periods. Companies make it very clear what these blackout periods are, so this was very stupid, as he was bound to get caught.

There's nothing illegal about trading your employer's stock if you don't have access to insider information. Millions of investors do that with no problems.

Something being technically legal under some conditions doesn't automatically make it sound financial advice.

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.


If you work for a company that grants stock via shares or options, you're going to have to sell them at some point. At which point insider trading applies.

And your company will carefully tell you when the safe times to do so (usually a month or so after a quarterly result or some such announcement)

its not that common. i have a friend who has blackout periods on his RSUs, but no company ive worked at with RSUs has any black out period.

every company I've worked for that's gone public (3 of them now) has had blackout periods

My very very very very large company doesn’t have stock lockup like that. I can sell my granted and vested stock at any time, unlike previous employers. Weird.

It really depends a lot on your role. I would assume your CFO, that knows the figures he will share in the market and analysts expectations, is indeed vetoed.

Most Senior Execs and the whole Financial division typically fall under these umbrellas.


My last company which was smaller, I was locked out for a month around earnings reports. I probably have more privileged information now, but I know not to trade on it by waiting the appropriate time.

>And your company will carefully tell you when the safe times to do so

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.


I think its usually a very pre-arranged time (like once a quarter shortly after the quarterly earnings since you cant know what's in the next quarterly earning if the previous one just happened).

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


No, actually, it is the opposite. For legal compliance, the company tells you when it is safe for you to trade, assuming that you do not have any insider information that would affect the stock price during the allowed periods, without getting into legal trouble.

My company does this and it is a relief for legal compliance reasons.


That is true. And my philosophy is, I will sell the moment it vests (subject to sell windows of course). I will take the money and invest it elsewhere.

I think it's sound financial advice, I'm just saying "don't trade your company's stocks" isn't really a sufficient solution to avoiding insider trading.

Sure. But there are so many companies listed. Will the world for you totally turn upside down if you stay away from one listed company? Maybe a particular trade is legal, maybe it is not. Why bother to take the trouble?

Adding a note, according to the initial filings from the SEC:

>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


> puts, calls, warrants and other types of option securities

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.


You're correct, let me update my wording.

> > “puts, calls, warrants and other types of option securities”

> 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).


Plenty of employers have company-wide blackouts for any stock trade in advance of earnings. So even if you don't have access to inside information you may be subject to company policies that prohibit it.

Yeah it's lame. Also they might prohibit shorting of the stock (always), preventing employees from locking in their stock option gains.

>Millions of investors do that with no problems.

Err, example please? I'm totally blanking here, not gonna lie.


If you are an insider at a company you work at, they tell you and you have to adhere to additional rules and blackouts around announcement and earnings time.

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.


Really? Even as a rank and file pleb I wasn’t allowed to trade except for about 2-3 weeks after earnings calls. I assumed that was the norm everywhere.

That is the norm. True insiders are subject to additional restrictions, and often set up a 10b5 plan to set conditions under which stock may be traded.

In almost every case, no employees (insider or otherwise) are permitted to sell derivatives (calls, puts), while they are employed.


I have been on insider list and subject to blackouts just for being a mobile developer. I don't know if all employees were considered insiders but at least all developers were.

Err, wouldn't most of these millions be employees of the company, who receive stock options as a benefit or a bonus?

Some employees get options. Others get grants or ESPP discounts.

You and your family doing your trades out of blackout periods, mainly. You can buy products or receive them as comp without problem.

Even if you do have access to insider information it should be (in my opinion) still legal to trade the stock.

There should instead be restrictions on the time for an order to go through, not on the act of insider trading.


Insiders are allowed to trade, however there are time limits. Plans to buy or sell must be disclosed well in advance and black out periods can apply.

If simply being husband of a woman who works for Amazon can help you acquire such information on which you can perform insider trading.

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?


> 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.


> 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.

that would still be trading on material non public information which is prohibited.


I would hope that original/primary research would not result in insider trading charges. (If I have no other connection to a company and count cars in a retailer parking lot, foot traffic, or trucks leaving a warehouse and trade based on that information, I would expect and hope that those trades would be legal, even if the findings that I self-generated were material (and of course non-public).)

if the research is done with public information, of course there is no issue. If you go, for example, dumpster diving on shredded company documents then it might be an issue.

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.


> 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.


The SEC has historically treated hacked earnings reports as material non-public information, so the post you're replying to is incorrect: https://www.lexology.com/library/detail.aspx?g=fd5d5ca7-20c5...

(not a lawyer, not legal advice)


I'd guess the same thing that stops Senators from trading on inside knowledge of global issues.. nothing

Usually just the lack of startup capital and lack of pedigree to get wealthy enough investors

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


There are laws against corporate espionage. In terms of legal intelligence gathering, hedge funds already do that: https://newsroom.haas.berkeley.edu/how-hedge-funds-use-satel...

How did his wife get no prison time?

They can't arrest a husband and wife for the same crime.

In case you missed the reference: https://youtu.be/75iv3RKQUAM

I have the worst fucking attornies

That's not at all true.

A reference to the TV show Arrested Development :) Terrible legal advice given to a crooked businessman!

Yes they can. And there are lots of examples.

Oh, sure, downvote a commenter because they didn't watch Arrested Development. c'mon, HN. :-P

Just speculation, but they may have children, and if so, prosecutors may have wanted to keep at least one parent out of jail.

It would be nice if prosecutors really were that compassionate. I've read that lots of kids end up in foster care because their parents go to jail. But maybe that only happens to poor people.

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.


From the article

> As part of the plea agreement, Bohra’s wife will not face criminal charges. Bohra’s wife is no longer employed at Amazon.


I understand the plea deal, but why. I am assuming they had evidence she gave him the data. Why let her off?

May be they would have to risk a trial to convict both but he would plea guilty to protect his wife. If the state believes he was the most responsible then they may judge a guaranteed conviction without the cost of trial to be worth it.

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.


disgorged 2.6 million, that means just losing the ill-gotten gains. It's not fair to call that "lost".

No. $2.6M "in disgorgement, interest and penalties." The ill-gotten gains were only $1.4M.

They had to pay back their gains, pay additional fees, and one of them serves jail time. They did not get away with anything.


If they kept the $2.6M in a liquid saving account just for cases like this one, yeah, that wouldn't be so bad. But I don't expect that's the case and in practice that could mean for example losing her house.

> I understand the plea deal, but why. I am assuming they had evidence she gave him the data. Why let her off?

"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.


if you don't personally profit from the bet... it's not one.

>Insider trading violations may also include "tipping" such information, securities trading by the person "tipped," and securities trading by those who misappropriate such information.

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...


She only committed some light treason.

They kicked back and relaxed, Emphasis on kickback.

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


https://en.wikipedia.org/wiki/Women-are-wonderful_effect

Women generally get less time for the same crime.


I wonder if he would have been caught if instead of buying Amazon directly, he bought an index fund that has them? I think Amazon makes up something like 3% of some of the Vanguard index funds.

I assume that the guy bought some type of short term options on Amazon to bet on rising/falling stock prices. I don't think buying an index fund, even with insider information, would allow for such massive profits.

Insider trade a million, you’ve got a problem. You have to insider trade a billion so that you’re untouchable. This is probably the hourly volume of insider trading at many hedge funds like SAC.

> You have to insider trade a billion so that you’re untouchable.

Some source of that? I believe that is not true. Other shareholders don't really want managers to profit from insider trading.


Print $billions/month of fake electronic money and NYAG will negotiate with you for over a year to finally decide on a gift "penalty" of empty promise and a less than 12hours of your fake money printing volume. cough Tether cough.

Steve Cohen did not go to jail despite his firm pleasing guilty.

https://en.wikipedia.org/wiki/Steve_Cohen_(businessman)#SEC_...


Anecdotally, the "price" is closer to 50+ mil, not 1 bil. Hopefully that will change for the better in my lifetime.

hey bro earnings gonna be good?

Having worked at Amazon, I know the employees are fully aware of blackout periods. There is no way to claim plausible deniability there.

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?


I think people simply don't appreciate that it's an easily caught crime. Most illegal things that one might do won't ever be caught, eg you break into someone's house and it would take the police to bother investigating and then put enough effort into that one case. Or to stay in white collar you might forget to report some income, how's the tax man to know unless you are already in focus?

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.


How do they know his wife worked for Amazon? Is this recorded? Or do you need to declare stuff like that?

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?


They know everyone's trades. It's reported by all the exchanges. It's just a matter of scanning this DB and looking at the suspicious ones, which can't be that numerous. You can manually check for relationships at that point.

Uhh I dunno say joint tax return with one person on an Amazon W2 and the other person reporting Amazon capital gains on their 1099B? Could it be any easier?

If you looked at the timing of his trades combined with his success, that alone could be suspicious, which could lead to a quick investigation determining he was married to the insider employee.

And it's probably all automated.

A lot of it is. The SEC hires data scientists to come up with these analyses (in fact I think I've seen some on whoishiring threads).

Martha Stewart went to prison for LYING about insider trading.

And even outside the blackout period, if you have material information that isn't publicly known and came from an inside source, it's illegal to trade.

It should NOT be easy for a family member to get hold of a non public earnings statement. That stuff is highly confidential. You generally can't take it out of a small set of private offices, let alone leave it on the dining table...

Gained 1.5 million. Lost 2.6 plus two years in prison and his wife's job. Not a great trade.

If you ignore all the ethical aspects of it and look at it as a purely economic transaction, whether it was a great trade or not depends on the odds of getting caught, not just the punishment if you get caught.

That's true. I wonder what the odds of getting caught are. I wonder how the odds would change if you had someone unconnected to you who placed the trades and shared the profits.

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.


> 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.

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...


Theres something much simpler - tokenized stocks. These are coins that track certain popular stocks and indices. There is certainly one for Amazon.

That marketplace would immediately be flooded with FBI agents and dogs. At least find a way to obfuscate it like "roses" on craigslist.

True. They forgot the first rule of insider trading. You have to be rich before you do it. It’s off limit outside the elite.

Could have bought a few houses around town and made more money.

Great financial advice from a poor guy.

The point was they risked some much for so little. So little that in their case, price gains a few houses around them would have netted them more and not risk jail time.

I am French. I have never been to America. From my point of view, so the view of an European who only know USA through the eyes of various medias. I am under the impression that justice sentences are very harsh there ! It looks like anybody can be sent to prison for pretty much nothing.

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.


Right, because financial fraud measured with 7 digits is exactly the same as being pulled over and talking to a police officer in broken English. (That's sarcasm, in case it doesn't translate well.) I'd argue if all an offender gets for a million dollar crime is a suspended sentence, maybe France needs to get a grip on their white collar crime problem.

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.


minimum security and he'll get out early for good behavior. Curious though, do you think a slap on the wrist would be better in this case? Would you also recommend a non-sentence if he broke into homes to steal $1.5M?

Depends did Papa go to ENA with the right people.

Why do you think that serious white collar crime shouldn't involve jail time.


[flagged]


Well as long as they don’t break the law they’ll be fine. That’s a much stronger signal when it comes to predicting who will face criminal charges.

How does this even end up on the SEC or IRS radar? $1.4M seems like a blip in the grand scheme of things.

It's really easy to look for trades before significant stock jumps. In this case, he made profitable trades before 11 straight earnings announcements. I'm sure their analysis flagged his trades, and then when they found out that his wife works at Amazon, they declared, "I choose you, Pikachu!"

His wife was probably already flagged on the SEC system as having access to Amazon financials. It seems fairly likely the trades were marked as potentially suspicious and once the volume hit some threshold they were escalated to a human investigator.

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.


SEC targets regular people to keep us in line. They let big institutional traders and connected people go.

Low hanging fruit. These kind of trading activities are almost super easy to catch, its like a small fish cheating on their taxes, software will detect it eventually.

That was the highest irregularity they could detect committed by people with no significant connections.

I don’t know about IRS but SEC enforcement actions are largely driven by complaints from regular people. Perhaps the stock broker got suspicious and acted per their ethical duties, or perhaps one of them wasn’t as tight lipped as they would have needed to be.

The initial insider trading analysis is automated. Dude traded in front of 11 straight earnings calls. That’s gonna get you put on a list.

Perhaps the husband and wife are not getting along so well now and one of them snitched on the other?

Or maybe someone at amazon tipped the SEC off

I have no doubt the SEC has a bunch of rules they use to flag suspicious transactions. The data analysis spits out a few names and they follow up in person to see who lawyers up and who cracks under pressure.

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...


Today’s Money Stuff was on exactly this. Under “Insider Trading”: https://www.bloomberg.com/opinion/articles/2021-06-10/maybe-...

Holy crap that's amazing. The FINRA list is an interesting approach. Nothing high tech, just put pressure on people who could have leaked.

"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-...


I don't understand why "wife" has any legal bearing on this. What if it was a girlfriend? What if it was a friend? What if it was some random dude on reddit?

Well they're interested in all of those.

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...


It doesn't per se. The Insider Trading rules at my company speak about anyone living in your household as well as any close family members. Guess that's because there is reasonable assumption you'd be able to tell those people about internal knowledge.

Lots of people who do insider trading think "if I don't do it then I won't get caught. I'll just have my [wife, dad, brother, cousin, mother-in-law] do the trade and the SEC will never figure it out".

Because (excluding some explicit agreements where they're legal), you share finances with your wife, so if you get money, so does your wife. Possibly the same with your girlfriend. A friend or random dude on reddit would need a proven connection.

Probably doesn't. Probably just makes it easier to automatically flag.

Stories like this boggle my mind. How do such people think that they are going to get away with this? If I were going to try something like this I would at least make some attempt to obfuscate my activities; trading through proxies, mixing in losing trades, something.

> How do such people think that they are going to get away with this?

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.


Were they even American?

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.


I think that mandatory training is useful for everyone, not just immigrants. It's not like American high schools / colleges are teaching about finance.

Sure, but with the right context those videos feel very cringey (who would ever do that???).


> Wall Street doesn’t insider trade because it’s stupid and there are lower-hanging fruit.

They do, its just that the CEO does not go to to jail

https://en.wikipedia.org/wiki/Steve_Cohen_(businessman)#SEC_...


> In reality, insider trading enforcement is effective.

This is impossible to know just like many other crimes.


If you're in a position to know that kind of information, especially for a behemoth like Amazon, the banks they deal with are going to keep a close eye on you, and your close family (and they've seen most tricks in the book I'd guess).

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.


And members of Congress trading on insider news (before bailout packages etc) get away with it?

Is that illegal?

Yes. The 2012 STOCK Act prohibits it.


How do they prove this? A lot of people play earnings. Amazon is not an obscure stock. In fact, making an earnings play on Amazon is probably one of the more reasonable safer things to do compared to what the world is up to now days.

They look for accounts that make consistently "lucky" large trades during blackout periods before earnings but at or just after the close of the quarter. Then they run the SSN/address/bank accounts/phone # associated with the trading account and compare to lists of insiders supplied by companies of who has access to their financial info.

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.


> They look for accounts that make consistently "lucky" large trades

Sounds like how casinos ban card-counters.


  > When they [the SEC] get suspicious matches they run them down to see if there's anything there 
This is correct!

If you only do it for one stock, do it for every earnings, and have a win rate of 100%, that becomes pretty obvious.

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.


Out of curiosity what was the outcome of each of these? Did Amazon drop on any of them? Hypothetically if they're all up, then it suddenly seems way less sketchy.

Since they got a guilty plea out of him, I'm guessing they had strong enough proof to discourage him from going to trial where he could've risked up to 25 years in jail time if jury found the evidence credible.

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.


Earnings calls dates are announced ahead of time, so that doesn't factor in to it.

Well for starters, his wife was forbidden to trade AMZN during the dates in question. When they find an account owned by her spouse, and possibly jointly, doing such trades it's not hard to figure it out.

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.


He and the wife pleaded guilty, so presumably they had enough proof. From the article it seems she had material access to finance data and was under obligation to not do trades so they would just need to prove he spoke with her about it.

Hard to guess right 11 times in a row.

But here’s the thing, Amazon is the type of company that most likely beat earnings for an entire decade. It’s not hard to guess at all.

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.


I remember when I first started trading stocks, I bought Amazon after Christmas 2013 or 2014 in anticipation that their earnings would kill it due to Christmas. I think Amazon was at around $400 at the time. After the earnings report, they dropped about $320 so I freaked out, sold and never touched Amazon again. I still cry to this day.

He needed Clinton's lawyer.

Instead of Martha Stewart's?

For all the conspiracy about Hilary, I believe her commodity trading stands out as confirmed. She traded for 10 months, making 100x and then stopped for some reason -- I guess they didn't like making money.

his wife would have been in a black out period where she's not allowed to be trading Amazon stock if she works there. i'm not sure if the blackouts specifically applies to the husband, but him doing this 11 times right before an earning call? its kinda blatant

edit: Blackouts include the employee and all family members. You can not trade during blackout periods.


He pleaded guilty so it doesn’t matter in this case

I am wondering if there could be a way to outsmart the system. Perhaps trades are monitored automatically and once flagged for suspicious timing and returns, they are reviewed manually.

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.


Obviously this.

If he were smart he’d just run for Congress, where insider trading is allowed.



I'll be honest, the title of the announcement made by the justice department looks like a news article title written by journalists and not by a government office. I have nothing against journalists or attorneys, the subject just doesn't look right.

I love how no one on Wall Street was convicted of anything criminal even though they almost destroyed the entire global financial system. There was even text messages of fraud being committed and nothing happened. Not even clawbacks or fines or anything. The government just let them go. That was so disappointing, and one of the first signs of how Obama was going to betray the progressives and let Bush's status quo remain. It was pretty sickening to watch the entire thing play out and then end with nothing.

I don't disagree with the general sentiment that the GFC was a total disaster, and I'd certainly not argue against the idea that a system had developed that had poor incentives, with sometimes greedy and unethical people working in it. What kind of concerns me, though, is the way that poor decision-making is conflated with breaking the law, or the belief that a terrible outcome ex-post necessarily implies illegality. I don't really see this logic being applied in other walks of life - in most jobs, if you are incompetent, or even incompetent and amoral, you wouldn't expect to be prosecuted.

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.


The GFC is a direct result of illegal behavior. If you don't understand that, you don't understand the GFC. The major problem is that Wall Street investment banks were marking shitty debt as AAA when it was no such thing. Because it was marked as AAA, the bad debt was bought throughout the globe because pensions and funds globally wanted only AAA debt. They knew the debt was shitty even as they were marking them as AAA and they didn't care. Once the debt started blowing up, all of these companies that thought they had AAA debt ended up holding onto shitty debt and it put everything at risk.

It's pure unadulterated fraud. No one was punished.


Well, those providing credit ratings (the rating agencies) were not the same as those selling the debt (investment banks). But more than that I think it's unwise to be so certain about intent - how do you know they were deliberately getting the ratings wrong, and not making a giant mistake? The rating agencies did very badly from the crisis, so it's hard to argue that they also saw the whole thing coming with premeditation.

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.


> became so big and complex that it was beyond's anyone's ability to manage,

No that is now true, people wanted to regulate derivatives but Alan Greenspan and others who were in power decided not to.


> one of the first signs of how Obama was going to betray the progressives and let Bush's status quo remain.

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.


Well not nothing, we got a nice lesson on how the world works :D

What law they violated? I'm curious, I really don't know.

"Rather, Bohra engaged in illegal insider trading in advance of 11 straight earnings announcements"

If he made 11 consecutive trades, he didn't need any insider info, or am I mising something here ?


This man sent to jail. How many politicians were sent to jail for covid insider trading? What about the billions Jeff Bezos fleeced in taxes? It's the rich man's world, where justice is only onto the poor.

The sad part is the stark difference in comments here and on that article [1]. People were skeptical that politicians could commit insider trading, but this couple of course deserves to be jailed…

[1] https://news.ycombinator.com/item?id=27406243


I agree with the first part, but it doesn't look like he was poor (the husband I mean). He had a lot of money and he wanted more

> How many politicians were sent to jail for covid insider trading?

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.


This dude is referring to: https://en.m.wikipedia.org/wiki/2020_congressional_insider_t...

>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


Jeff leverages trillions in infrastructure, the maintenance of which costs billions. Taxpayers subsidize that. You aru not being genuine with your words, but this I will clear up.

That's what countries and governments are for: people and companies pay taxes so other people and taxes count use the infrastructure.

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.


Like I said, you are not being genuine with your arguments. What you're saying is technically true but not a productive viewpoint. That's why I don't want to address your stuff. Suffice it to say that Bezos doesn't pay his company's offset in taxes.

Rules for thee but not me

Would love to see the same penalties applied to members of congress who used info from private briefings at the start of the coronavirus pandemic to make stock trades. :|

This 100%. For example, Nancy Pelosi should be named the Wolf of Wall Street. Look at that amazing trade she made on cyber security companies right before the hacks on the government were announced.

Source: https://housestockwatcher.com/summary_by_rep/Hon.%20Nancy%20...


Nancy Pelosi’s story is her husband does the stock trading without her involvement (or even her knowledge prior to her regular reports to Congress about trading activity). If true (and assuming she’s not giving privileged info to her husband), that means no insider trading.

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.


I'd like to see them required to make their portfolios open to the public in real time. That way, the rest of us could invest in an index fund based on congressional investments, and share in their success.

That's heavily assuming Congresspeople are successful at investing. Assuming insider trading is still illegal for Congresspeople, you will have a hard time picking between "people not insider trading, good at picking stocks though", "people not insider trading, bad at picking stocks", "people who are insider trading, and actually good at it", and "people who are insider trading, but still make terrible choices".

Good luck.


Most traders suck at trading, if a congress person with no financial history starts beating the market, I’d bet a lot that they’re cheating.

If they're shorting or just holding for a short time it's trading. Otherwise long-term positions are investments.

Wish we could see something like that happen, but you are going to need some representatives to vote against their best interest. Kind of like why run off voting will never see the light of day.

The voted to pass the STOCK act, requiring disclosing these trades within ~30 days

30 days? That's some bullshit. Legislators trading based on closed-doors meetings related to "national security" (covid briefings) or even pending market-moving legislation should be on par with insider trading. It's not, and they will never collectively vote against their interests, to use their information for personal gain.

That is all on the table. The SEC can convict federal government employees of securities fraud for trading on this type of insider info

Ye, that is just a ridiculous excuse. I agree that the option too be tempted should also be removed.

I’m under the impression that representatives are legally incapable of insider trading. Being in the congress privileges them to use the information they hear during speech and debate as they see fit.

Can you name the companies and a source? I recall a few weeks ago there was a HN post about congressman but I didn’t recall seeing cyber security in the list.

They made a killing on Tesla calls for one, million dollar investment. https://newsthud.com/disclosure-fillings-reveal-pelosi-purch...

It looks like her TSLA stock is down from when she purchased it, because there is no corresponding sale and TSLA is trading for less than it was on 12/21/2020 (and has been for the last month... the disclosure period for trades). So instead of purchasing an index fund, which would be up 10% since 12/21/20, she purchased TSLA which is down ~5%.

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?


They didn’t buy stock, they bought option calls which use leverage to profit massively of small movements in the ticker. They are incredibly risky, and Nancy’s husband bet between 500k and $1M on them, which means that if the trade had gone sour, they could have lost that immediately. That’s WallStreetBets levels of gambling, and a strange behavior for an otherwise safe trader.

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.


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.


you changed the subject, though, or at least the target. parent comment was about David Perdue and Kelly Loeffler, the two GOP senators who profited off the pandemic; this post redirects the topic, and the outrage, to Nancy Pelosi.

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.


Or when she or her husband longed TSLA calls a few days before Biden announced the government (Secret Service? Forgot exactly which part) will be buying EVs.

Lol, doesn't take insider trading to see that one coming...

And it could also be insider trading. This was a market moving announcement (in TSLA) a few days after she bought.

There's plausible deniability for sure, it might've been coincidence, and I'm not denying that.


Before passage of the STOCK act in 2012, there was disagreement whether members of congress could be prosecuted for insider trading.

Those private briefings likely did not contain nonpublic information, or especially nonpublic information about specific companies.

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.


There absolutely was nonpublic information. Probably not about individual companies but certainly about the degree of the looming impact to the global economy.

You're overestimating what these private member briefings are really like.

What nonpublic information do congresspeople have about how pandemics might impact the global economy?

What kind of information do you imagine the leadership of the most powerful military and intelligence organization in human history might have?

If it was intelligence that any investor could have gathered themselves, that's not non-public. It doesn't matter that the government are the best investigators.

we don’t know what was said at the briefing.

Insight into multiple companies' preparedness heading into a pandemic would make it easy to pick winners and losers

What non-public information about companies' preparedness would they have? Couldn't any investor research a company's pandemic preparedness? What special information about that does Congress have access to that we don't?

Considering the pandemic became a pandemic in March and they sold stocks in February, your question reads as loaded.

The pandemic was definitely a "thing" through all of February, just binned as something that happens to Other People. February 24th was when US stock markets started to really react, and it was maybe 2 weeks until major US cities were making decisions like schooling from home.

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.


I hedged my portfolio in January. You didn’t need a declaration of pandemic by the WHO to see the risk — that’s a trailing indicator. I exited my initial hedges in mid-March.

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.


It was becoming fairly obvious by February even to people outside of Congress (such as myself) that a global pandemic was likely impending. I didn't attend any secret briefings.

What nonpublic information about a publicly traded company do you think they received?


Representatives of the US government sold stocks, meanwhile many Americans only received “it’s the flu”, “this will be over in a few months guaranteed”. I didn’t assert anyone received info about a company. I’m only pointing out to the parent comments author that stocks were being dumped by congress prior to there being a pandemic. I don’t know what information was given in a secret report, if I did, it wouldn’t be a secret.

It doesn't matter what messages laypeople received from the media. All that matters is if those laypeople were capable of discovering the same facts which congresspeople had access to. Congresspeople were also subject to those messages in the media which downplayed the severity of the virus, and many laypeople also sold stocks in February despite the media opinion.

You seem smart, and if you published an email address in your profile, other smart people who want to connect and discuss things with you could send you email. :)

PS: email me


The stock market didn’t start to decline until Mid March so by definition the majority of “betting men” were still not sure the pandemic would have as far reaching of effects they did. It’s highly suspicious that US Congressmen did after getting briefs that were presumably not public information.

> The stock market didn’t start to decline until Mid March so by definition the majority of “betting men” were still not sure the pandemic would have as far reaching of effects they did.

Indeed, there is a bell curve of "wait-and-see-what-the-others-do".

https://www.epsilontheory.com/sheep-logic/


What a waste of time and resources. You could argue this behavior helps information leak into the market.

Does anyone honestly care about a million dollar trade by some employee's husband?

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.


> ...this seems like a total waste of time and resources when you could be chasing whales like you should be.

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.


> They think the SEC has "thresholds" and only go after "whales". They don't, they look for patterns and go for it.

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.


That “line”, if it exists, is not something that is publicized. I suppose it could be inferred by looking at cases, but someone could still be busted for any activity during the blackout period, I think.

The people who do insider trading, however, do it for greed. 50 bucks once a year isn’t going to cut it for them.


> Does anyone honestly care about a million dollar trade by some employee's husband?

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.


It's interesting to think about the incentives. Look at the press they're getting. It's at the top of HN and will be fodder on all major news outlets. It was probably an easy slam dunk case for the prosectors.

Considering he did this 11 quarters in a row, this might be the most rim-shaking slam dunk in the history of slam dunks.

About one person, probably not. I think this one hits close to home for a lot of us that have stock in many of these large companies from being employees. Granted, this situation seems particularly egregious, trading off of insider financial information not even available to most employees, but still.

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.


I was sure the acronym was FAGMAN...

> Does anyone honestly care about a million dollar trade by some employee's husband?

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.


There is already no trust in the financial system (it's based on usury after all).

There's a lot of trust in financial system. A lot of people invest in stocks and store their pensions in 401k.

>The bar for insider trading is hilariously low

I've personally never considered a million dollars a low-ball figure.


In this case, it was a planned crime, with profits ship to Seychelles(no aml) and then on to India. Had a fine been possible, no jail time. This type of corruption is never single sourced - the information transfer for all value types, are done where schema and data(databases in total) -- leaving US national security for sale eg "sunburst" and public data in the hands of ( car warranties stalkers ) In sum, all Amazon data has is in the hands of India criminal networks having for travel, fake ids and blackmail .. leaving American youth unqualified for jobs in their country.. its hard to compete against fake credentials and coordinated action ( the results are obvious )



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