Archive November 2018
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Week InReview: November 30, 2018
"New securities-trading rules are having one pernicious side effect on European stock markets: Research is increasingly paid for by those being researched.
"So-called sponsored research has long been common in the bond market, where ratings firms are paid by firms to grade their credit risk. The European Union's catchily-named second Market in Financial Instruments Directive, or MiFID II, is helping extend the problem to equities."
The Dangerous Rise of Sponsored Stock Research
- The Wall Street Journal
Week InAdvance: November 26, 2018
Week InReview: November 23, 2018
Week InReview: November 16, 2018
Week InAdvance: November 12, 2018
Week InReview: November 9, 2018
Week InAdvance: November 5, 2018
Week InReview: November 2, 2018
Among the Laws of Insider Trading, two have special places in my heart. One is the Second Law, which is that if you have inside information about a company, don't use it to buy short-dated out-of-the-money options on that company. This one is so important, and comes up so often, because that's how they catch you: Suspicious options trades the day before a big event are a giant red flag, and if you've never traded options before it can be a bit hard to explain why you suddenly got a hankering to do it right before a merger.
The other is the Fifth Law, which is that you should not insider trade by planting bombs at a company and buying put options on its stock. This one comes up infrequently, and is arguably not a law of insider trading at all, but it is nonetheless very important, because bombs are bad. Like, insider trading and stock manipulation are generally illegal and you shouldn't do them and if you do you might get in trouble. But if you just go around blowing things up with bombs you will get in much worse trouble.
That is: Violating the Second Law greatly increases the chances that you'll get caught, and violating the Fifth Law greatly increases the chances that, if you do get caught, you'll go to prison for a very long time.
Matt Levine's Money Stuff