from Hacker News

Is it insider trading if I bought Boeing puts while inside the wrecked airplane?

by wazbug on 1/27/24, 5:41 PM with 214 comments

• by KieranMac on 1/27/24, 7:15 PM

  No, it is not. If you do not have a fiduciary relationship with Boeing and you have no confidentiality obligations with respect to the information, you are not trading on inside information. If you're in the plane when the door blows up, you're just the first person with material public information. You're not trading on material non-public information.

  See, e.g.

  https://www.law.cornell.edu/wex/misappropriation_theory_of_i...

• by dia80 on 1/27/24, 8:43 PM

  UK rules differ from the US there is a 3-point test for insider trading:

  1. The information has to be specific - Yes - you should sell Boeing

  2. Would a reasonable investor take this information into account when making a decision to trade - Yes - this seems quite clear

  3. The information must be non public - IIRC disclosure to a large group of people - in this case the perhaps 200ish people on the plane knowing it had a problem would probably count as the information being public and thus this test is not met and you are free to trade - I think the bar is around 30 people

  I knew all those hours spent in compliance training would come in handy one day!

• by BMc2020 on 1/27/24, 8:30 PM

  Ctrl-F Casino Royale

  During the film, the terrorist financier Le Chiffre uses a Ugandan warlord's money to short-sell stock in Skyfleet, thus betting the money on the company's failure. The banker plans to bring about said failure by destroying the company's prototype airliner. After his original bomb-maker is killed by James Bond in Madagascar, another is hired to complete the job. The bomb-maker infiltrates Miami International Airport and steals a fuel tanker; attaching a keyring-sized bomb to the vehicle. As he attempts to blow up the prototype with the truck he is intercepted by 007 and a fight ensues on-board. Eventually the terrorist is forced from his vehicle and Bond narrowly prevents the truck from colliding with the plane. With his plan foiled, Le Chiffre is left with a major financial loss and is forced to set up a high-stakes poker tournament at Casino Royale in Montenegro.

• by jedberg on 1/27/24, 9:20 PM

  Of course not, because you learned the information yourself as an outsider.

  Just like the hedge funds that pay for satellite images of all of the WalMart parking lots in the country and count the cars to estimate year over year sales. It's information they have that no one else does, but they didn't get it from an insider.

• by gnicholas on 1/27/24, 8:13 PM

  I recall learning in law school that “if there is no tipper there can be no tippee”. In order for there to be a tipper, the person has to have an intent to provide a tip improperly. Imagine there’s a CEO talking in an obscure foreign language in his own backyard, to a colleague on the phone, he is not a tipper — even if someone who happens to speak that obscure language is walking by his fence at that moment. As a result, that person cannot be a “tippee” because there was no tipper in the first place.

  I’m not sure that not being a tippee means you’re completely in the clear, since you have material information. But it’s presumably not non-public information since hundreds of people know it, and thousands more are finding out by the minute.

• by alexwasserman on 1/27/24, 7:56 PM

  Matt Levine covered this well too: https://archive.is/Kd6Os

  The answer being no, because as a consumer you have no duty of confidentiality.

• by ghaff on 1/27/24, 7:06 PM

  IANAL, but I don't see how. If you're just an ordinary person, you're trading based on an event you witnessed in the course of going about your life. No different I would think than if you witnessed a plane crash. You might be investigated though if the amounts were large enough.

  It gets much more complicated I would think if you were an air traffic controller or otherwise learned about it in a professional capacity.

• by clbrmbr on 1/27/24, 8:19 PM

  Hmm. So a rouge Meta employee could put a barometric pressure monitor in Messenger or WhatsApp (that people use even without paid in-flight wifi) to detect depressurization and automatically short the airline and aircraft manufacturer.

• by zaat on 1/27/24, 9:48 PM

  It can be more complicated, what if you are the pilot?

  > On August 15, 2006, it was revealed that Halutz sold off his investment portfolio three hours after two Israeli soldiers were captured by Hezbollah during the Zar'it-Shtula incident, leading to the war. While this action on the part of the chief of staff is technically legal and is only restricted (through blind trusteeship) from cabinet members, the State Comptroller Micha Lindenstrauss has called to expand it to the chief of staff and to other senior officials. Several Knesset members called for Halutz to offer his resignation and some members of the General Staff Forum commented that his resignation appeared inevitable

  https://en.wikipedia.org/wiki/Dan_Halutz#Investment_portfoli...

• by Fezzik on 1/27/24, 7:09 PM

  Original post from 16 days ago: https://news.ycombinator.com/item?id=38948827

• by ackbar03 on 1/27/24, 7:04 PM

  My man you deserve every dollar you make from that trade

• by LASR on 1/27/24, 8:04 PM

  Of course not. I could see the airplane lose a door in the sky and immediately short airline stocks.

  But so can anyone really. People watching all this have no control over the door actually falling off.

  Insiders have the ability to shift the course of the company. So the reason why we have this law is so that insiders don’t short their own stocks and then run the company into the ground, making guaranteed profits from that at the expense everyone else.

• by anonu on 1/27/24, 10:58 PM

  The incident occurred at 526pm local time on the West Coast, so markets were closed. You wouldn't be able to trade.

  I'm a bit surprised that question is being asked. Fundamental investing is all about understanding things about a company that nobody else knows. This is an age old approach to investing. If you happen to stumble on that information, it doesn't make it insider trading.

  Where is crosses the line is if you're an insider and effectively breach your duty to the company or as a fiduciary. You're effectively stealing from the company. A passenger on an airline cannot steal information.

• by pavlov on 1/27/24, 7:46 PM

  Is it insider trading if you sold Microsoft stock short because Windows gave you a BSOD?

  Clearly not. The question is only raised because airplane failures are much more rare than software failures.

• by KETpXDDzR on 1/31/24, 3:38 AM

  Recently, big airlines added the functionality to filter by airplane type. That comes in handy for such trading tricks.

  If you're employed with the airline, trade your insider informations instead of using it yourself. There are TOR websites to do so.

• by kazinator on 1/27/24, 7:50 PM

  No, you're not a Boeing insider by sitting inside their plane; that's weapons-grade word semantic equivocation.

• by low_tech_punk on 1/28/24, 12:41 AM

  Related to this, MIT professor Andrew Lo discussing stock price after Challenger rocket explosion. https://youtu.be/sMKQywwkIjQ?si=IXRB2iRZ0hPH3Sic&t=4633

• by supportengineer on 1/27/24, 8:12 PM

  Someone is going to write a trading bot that scans worldwide ADSB data, looking for sudden, unexplained altitude changes - Identify the airline and equipment type and short them both. Assuming this doesn't exist already.

• by motohagiography on 1/27/24, 10:56 PM

  Already imagining a black mirror Nosedive app that recognizes products in your location and environment and presents offers to buy or sell the stock of the companies that produce them based on your experiences of the produts in the moment.

  The irony is of course is the adage, "Hate the service? Buy the stock" because it's so valuable people use it in spite of it sucking. Nobody ever thinks, 'this is terrible, how do I get long?' or, 'this is so awesome it can't possibly last, how to get short?', but that's how some traders make a living.

• by alkonaut on 1/27/24, 8:36 PM

  The interesting case of this question is mentioned in the comments to the question but not answered: what if you are the Boeing CEO, you have a ton of stock, and you are on the flight.

  Would it be insider information to tell your broker to sell evrything before the plane lands?

  It’s information about your company not known by the (wider) public but it’s also not information that it’s your job to protect or that you have any special access to? So if I understand correctly, it wouldn’t be insider trading in that case either?

• by charlieflowers on 1/27/24, 9:21 PM

  If members of Congress can make millions trading on info they get from sitting on key committees, then trading based on your first hand experience certainly should be ok.

• by IAmGraydon on 1/27/24, 10:29 PM

  Of course it’s not insider trading. My question is how did this make it to the top of the HN front page? It reads like something you might see on WallStreetBets.

• by choeger on 1/27/24, 9:47 PM

  A hacker news post to a stack exchange question copied from reddit? At some point we might simply fuse these networks into one, don't we?

• by PlunderBunny on 1/28/24, 4:39 AM

  From the headline, I thought this was going to be a link to an article on The Onion [1], or McSweeny's Internet Tendency [2].

  [1]: https://www.theonion.com [2]: https://www.mcsweeneys.net

• by curiousgal on 1/27/24, 8:34 PM

  I would expect the answer to depend on the jurisdiction, Insider Trading is defined differently in US Vs other countries.

• by xarope on 1/27/24, 11:13 PM

  Someone explain to me why is this any different to HFT bots trawling the web and reacting in microseconds to any adverse "news" about Boeing?

  ("news", since I'm not in that industry and don't know if they only react to official media, unofficial media - aka blogs etc, tweets, etc)

• by m3kw9 on 1/27/24, 8:50 PM

  You don’t work for that company so it only means you for the news the fastest.

  Even if you worked for Boeing, it is public news as soon as it happened. You just happen to know it the fastest. Pure alpha

• by cedws on 1/27/24, 7:23 PM

  I've been thinking about building a system that would enable me to quickly react to black swan events like this should they happen around me in daily life. The problem is that most of my funds are in savings accounts that take 1-2 business days to withdraw from, so I'd have to keep them in accounts that are faster to access.

  Also, this information that the passengers had in advance could have been worth millions in the right hands. If you had information like this, how could you quickly find parties interested in buying this information or giving you a share of potential gains?

• by skynetv2 on 1/27/24, 8:41 PM

  This is clearly public information, it is not sensitive or restricted to the people with relationship with Boeing who are privy to this information.

• by barbazoo on 1/27/24, 7:26 PM

  Why would it be it’s public information at that point.

• by np_tedious on 1/27/24, 8:25 PM

  HN of a stack exchange of a reddit

  (special shoutout to Money Stuff)

• by girafffe_i on 1/30/24, 12:05 AM

  No, it's not material knowledge, it's just that you accessed public information first.

• by bfung on 1/27/24, 8:29 PM

  The actual article was from Reddit’s r/wallstreetbets , where any excuse to post meme trades goes. Go read for fun.

• by philwelch on 1/27/24, 7:23 PM

  This is a good opportunity to point out that insider trading is a victimless crime. If you sell stock with insider knowledge, you sell it to someone who would have happily bought it at the same price or possibly a higher price from someone else anyway. The same is true if you buy stock with insider knowledge. The only net effect of insider trading is to make the market more efficient by pricing in otherwise inaccessible information.

• by pricees on 1/27/24, 10:30 PM

  I remember reading that a journalist dig into some gossip about a business found there to be credible evidence of malfeasance, sold the stock short, published the article, and was convicted of insider trading. I cannot find any of the details, but I recall reading this somewheres. Insider trading is whatever the govt said it is, which is why Martha Stewart went to jail, and walk street bankers just pay fines.

• by bdcravens on 1/27/24, 8:27 PM

  I wonder if the same would be true of the media that learn of events before they are publicized.

• by amelius on 1/27/24, 9:25 PM

  Is it insider trading if I bought Apple puts right after an auto update that crashes my phone?

• by ejb999 on 1/27/24, 7:13 PM

  of course not - you are not an 'insider' if all you are as a customer with a bad experience - no different than you buying puts on restaurant where you think the food is terrible or even made you sick.

• by machomaster on 1/27/24, 10:22 PM

  It's weird that nobody mentioned Hijack miniseries with Idris Elba yet.

• by zilti on 1/27/24, 7:38 PM

  I'm slightly disappointed that the question was only hypothetical.

• by vpribish on 1/27/24, 10:49 PM

  no. this is a clickbait, bullshit, question that's been making the rounds of social media for weeks. You'd think that people here would not fall for this crap

• by eschneider on 1/27/24, 7:13 PM

  It's not if you don't have a fiduciary duty to Boeing.

• by jbverschoor on 1/27/24, 10:31 PM

  Im not sure how much more inside someone could be

• by BurningFrog on 1/27/24, 9:31 PM

  Trading on your phone outdoors is always safe!

• by alexander2002 on 1/27/24, 8:02 PM

  Is it insider trading if i bought Tesla puts while inside the wrecked tsla ? Seems the intituive answer is no.

• by tester756 on 1/27/24, 7:22 PM

  It's is just a meme

• by worble on 1/27/24, 9:09 PM

  "Also can someone please answer fast as we are descending very quickly"

• by shove on 1/27/24, 7:01 PM

  lol no, but also ssshhhhhhhh

• by ijhuygft776 on 1/27/24, 9:17 PM

  just dont tell anyone about it. /s

• by voakbasda on 1/27/24, 7:12 PM

  Isn't the practical answer: "it depends on which way the wind is blowing when the regulators or courts make their decisions"? If they want to get you for something, they will find a way.