On February 21, 2018, August Troendle, a billionaire from Ohio, made a remarkably well -approved stock trading.He sold 1.1 million US dollars to Syneos Health shares 16%the day before a change in the administrative change.It was the greatest decline of one day for the price of Syneos shares.
In February 2019, Troendle sold a large part of this position and made a profit of 2.3 million US such a short time in the previous year.(Troendle refused to comment.)
The Medpace Manager belongs to dozens of large managers who have exchanged measures by competitors or other companies with close connections to their own.A Golf -Do -Mexico -Oil investment invested a day in a partner company before announcing good news about some of your Poços.Executive achieved a return of 37%in less than a week before it was bought by another company.A toy Magnata negotiated hundreds of millions of dollars of shares and options for his main competitor, which carried out transactions in at least 295 days.He achieved a return of 11% in a last period of five years, even if the shares of the rival fell by 57%.
These transactions are recorded in a series of IRS data of action negotiations in the richest people in the country.Part of a treasury of tax data that is leaked to the PropublicaThe propupublica analyzed millions of these negotiations, isolated managers of companies that negotiate in companies in connection with their and identified anomal transactions -either because of the size of the bets or because individuals negotiated a certain action for the first time or used for the first timeSometimes from a high return.
Records do not indicate why managers carried out specific negotiations or what information they had.You can simply rely on extensive industry knowledge for years to make cunning bets at accidental times and to be sold with an exquisite time.
These commercial records were never available to the public.Until the SEC itself does not have a comprehensive database.The records offer an unprecedented insight into the titans of the US industry, which are even richer on the stock exchange.
US -American securities frees “insider negotiation” - purchase or sale of shares based on access to non -public information that other investors are not available - under certain circumstances.Historically speaking, internal trading processes and SEC application focused on company employees and people who negotiate them near them, the actions of their own companies.
However, the managers of companies may also have comprehensive access to non -public information about competitors, partners or suppliers from their companies.Experts.Prublica described several companies, not to mention the Section that replied if he was still in the Ministry of Justice, "of course we would look at him".He added that the key to discovering the Prublica is: "Negotiation does not seem to be a unique thing or twice. It is much further."
Harvey Pitt, former SEC President, said that it was not inappropriate for company authorities to bet on the assets of competing companies.
"Managers should not negotiate their competitors' measures," said Pitt.around ".
There is at least one sign that the SEC was interested in this type of negotiations.In 2021, the agency brought a privileged exchange of information against a manager of a biopharmaceutical company that found that its own company should be bought shortly before purchase and later in a competitor whose share price also rose in the news.(The case is still pending; the accused contested improper behavior.) It is unclear whether this action is a supremacy of the increased SEC version, which refused to comment on its execution priorities.
Privileged information trade is a simple concept and difficult to prove at the same time, as it depends on blurred definitions andCourt decisionsThis favored the accused and weakened the application.The questions are even darker when it comes to the fact that managers buy and sell actions from rivals and partners.This can be completely cool.
But even if they are cool, according to securities experts, these companies can enable managers if their companies lose.The managers are usually generously compensated for with the actions of their own company, which gives them a direct reward for maximizing these profits and increasing the shares of their company.Existed stocks of competitors may give you a reason to cheer for your rivals to be successful, said Alan Jagolinzer, professor of financial accounting at Cambridge University Business School.
And the negotiation of non -public information deserves millions, managers contribute to the perception that the stock market is saddened to be privileged.The industry uses this knowledge for personal profit can undermine the public's trust that the markets are fair.
After the stock exchange accident in 1929, the Americans found that the rich company managers had exploited their positions to make profits in their personal investments.In response to this, the Congress created the SEC and approved renovation work to operate the field for investors.These reforms required the most important managers of public companies not to swim in an ocean in order to disclose all the negotiations that they carry out in the measures of their own company.
However, this distribution request has never registered for negotiations that do managers in stocks of companies and partners.He left them to the supervisory authorities and judges to kill the details.
Nevertheless, the basic concept of the privileged negotiation is well established.Every employee (or hired for you as a lawyer or investment banker) who, for example, knows a bad quarter, knows a new checkout product or an approaching acquisition, is usually forbidden to buy or sell stocks in this company.
To bring one case, the federal authorities have to prove two main elements.First stocks of the company.Secondly, the employee who negotiated this information or the person who did the person who has had the obligation not to reveal or use it for a personal advantage.
These elements can be difficult to define a CEO of the public company that can argue that their proper trade in the actions of a competitor was informed by a deep knowledge of the sector, not by a non -public tip.The owner of a private company can argue that this can argue that you cannot use public information from your own company to negotiate competitors' actions because you have no obligation not to use information for personal benefits.
Many employers add their own restrictions.Lawyers' law firms and investment managers often require employees to clean securities negotiations in advance.Some companies have guidelines that prohibit trading while they do not have public information about competitors, customers or partners.A Medpace, the public trading company that Troendle has led by profit from negotiations in various competitors, indicates the probability of employees not to learn public information about companies other than their own, and warn the course of its tasks is prohibited, the measures orTo negotiate securities of the other company. "
No other Prublica database leader seems to have negotiated in competing companies on the size of Isaac Larian.CEO of MGA Entertainment, whose Bratz Fashion Dolls competed with Mattels Barbie Dolls, Larian negotiated hundreds of million dollars in the value of his titles of his titles of his title between 2005 and 2019., was often negotiated.)
In the past five years, Larian has made a profit of around 28 million dollars at Mattel negotiations.This corresponds to a return of 11 % for its investment, which sounds a modest result until they are of the opinion % in the same period.
MGA and Mattel are violent competitors.Learner employees of Mattel and has often attacked the company on social media and cable news."Abnormal" and describes the company as "realm of evil".
Mattel and MGA sued and were satisfied.
And with all of this bought and sold Larian Mattel shares.For example, on June 5, 2008, he sold 3 million US spiedered Larian and his family.He was a potentially revolutionary evidence in a process in which Larians MGA was accused of unpleasant commercial practices.
The judge ordered the sealed letter, but his existence later became public on that day when he was unveiled in the press.The next day, Mattel's shares fell by 2.6%.On the day before, Larian avoided the loss in these actions.
In 2015, the two companies were controversial again.On this point, MGA claimed that Mattel stole his ideas for new toys.In April, Larian sent an e -mail to Mattel after the Mattel CEO after the two Mattels had been a Mattel share price.Increase if the two companies have concluded a contract from outside the court."I think the street will reward Mattel positively as soon as this has been solved and the legal rates disappear," wrote Larian in the e -mail.
But Larian never settled.And he seems invested during the month in which companies discussed an agreement.Negotiations were short negotiations or action options, which Larian withdrew in advance that the measures fell.
Larian recognized Mattel's share publicly."I earned a lot more money with Mattel's actions than with a toy company of 4.5 billion US of the main shareholders," said Larian in LinkedIn in 2017.)
Sometimes larian negotiations corresponded to the implementation of new MGA products that reduce the market share of Mattel and could therefore reduce Mattel's share price.In the month before MGA unveiled a new series of Bratz Dolls in July 2015, Larian seems to have invested (here too the evidence is not conclusive) against Mattel about 3 million US dollars.
At other times, Larian Mattel's measures negotiated before the company announced which experts from the sector could be able to learn to learn as CEO of a rival.Toy companies deal with the same suppliers and retail stores and compete between Si to Si to The Prime Shelf Space.It is not unusual to obtain information about the performance of a competitor.And according to interviews with eight people who worked for him, subordinates in minutiae about the industry.
On July 26, 2017, Larian Mattel Stocks sold 1.4 million US. The MGA shares fell by almost 8% by the end of the following day, the beginning of a 23% packaging slip next month.Larian avoided these losses.
Prublica described Larian's trade history - without identifying them or the companies involved - for various securities experts.They said the standard was potentially worrying and deserves regulatory and legal examination.However, they also observed numerous warnings and possibilities on how the law offers a latitude for this type of negotiation.
According to experts, these types of companies for managers of public companies or private companies with investors are generally more dangerous.According to experts, managers in such companies are usually a clear duty to contain company information for their own personal advantages.
But if a manager has his entire company that negotiates before his own actions, such as the announcement of a new product line or based on his own sales data, he would probably not be legally problematic.% of the company, but it is unclear whether another person or another Larian unit has the rest.) "The US law does not normally prohibit the negotiation of information," said Joshua mids, professor of law who studied commercial laws.
The use of confidential information from outside the company itself, as if an executive negotiated after learning something about the competitor of a retailer, experts could raise legal questions and negotiations after learning a non -public fact that it is to be expected inDisputes or settlements."SEC would definitely take a look at that," said Micht.
Pitt, the former SEC President, repeated these concerns."This behavior contains the seeds of some very potentially harmful activities," he said."That is very risky."
Larian rejected inquiries for an interview and also rejected some inquiries to answer a list of detailed questions for this article.Sanford Michelman told the department that every proposal that Larian violated the law was "wrong and defamatory".Proof that Larian had essential, non -public information that Larian knew that they were violated.However, Michelman also accused the Prublica of having made "false assumptions and accusations", but did not identify any specific errors in Prublica reports.
Managers can often know more about their business partners than about their competitors.Prublica data show that some managers bought stocks from their partners with an excellent time.
Gerald Boelte is President and founder of LLOG Exploration, one of the largest US oil production companies in privately ownership after Deepwater Horizon launched millions of oil gallons in the Gulf of Mexico in 2010., Purchase of new rental contracts.
One of Boelte's oil production partners was Stone Energy, at the time a listed company, both log and Stone were based on Louisiana.In 2013, the two companies made deep water in the Golf.In another part of the golf, known as Viosca Knoll.
In the same summer, a separate project seemed to be successful in another part of the golf south of Louisiana, Cardona Wells.The reserves had increased, and in the following days new promising details of the Cardona field were also unveiled.Stone's actions were created in the following days.
This was good news for Boelte.The day before the announced stone gains, he began buying 527,000 US dollars in the company's shares.Tax data indicates this.When he sold stocks two months later, Boelte made a profit of $ 343,000, a return of 65%.
In addition to Stone's partner, there was another reason why Boelte received information about how the company was in front of the public.After Stone had seen positive signs in his Cardona project, they sold his participation in Knoll de Viosca.Both companies worked together.Stone worked together.Stone planned to use the sale to further develop your own projects like Cardona Wells.According to the company documents, two pages were offered for sale in October, but these negotiations usually last for months, he said, an expert.This indicates that Boelte can know about the characteristics of changing the stone before buying shares.
On oneDetailed statementBoelte said: "I did not negotiate in material and not public information from competitors, business partners or others."Or I had no discussion with stone energy with regard to their intentions in terms of energy."Based on this, he invested in" several energy titles, including stone energy ".
Boelte said in advanced knowledge Boelte said, "so it is clearly wrong."
The verification point system council has tacitly considered its "strategic" options for over a year.The company of New Jersey, the anti-the-from 2015 and early 2016, had created a list of possible buyers, and the company's bankers began to contact them.
The discussions warmed with a potential buyer, CCL Industries and Checkpoint gave the company access to its financial and confidential documents.In January 2016, CCL announced that she would apply for approval for advice on acceptance.CCL would offer USD $ 10.15.An important price per action.
In the meantime, Jim Saney, CEO from Invue, one of the checkpoints from Checkpoint, bought 285,000 US dollars in corporate shares.It just started.
A month later, the news came to bought the cheek.Saney made a profit of 2.3 million US dollars from his investment, a cherry over the 25 million US dollars that he had earned from his own company this year.
In an interview, Sankey said that he did not know that the control post would be bought and that his company was not addressed by the control post through a possible sale or a possible partnership.Saney bought stocks because the price fell.2007 in 2007. He supervised a sale of around $ 150 million from one of his product lines against the track to the checkpoint.He knew that the department's operating revenues had lost customers at the time of sale and since then.Based on this calculation, he believed that the share was undervalued."I built the deal," said Sankey, the CEO of Invae, of closed capital."And I knew they couldn't spoil everything."
Sankey said the researchers, he believed in the Sec, interviewed the two brokers that he had instructed to buy the review offices.Had no proof, said Saney, but "they accepted my word."
For Barry Wish, the loss of a contract for a competitor with a significant advantage.The desire in the 1980sco -foundedOcwen, a mortgage service company, has headed the West Palm Beach Company in Florida for decades.The mortgage servers essentially act as a broker between creditors and real estate owners, manipulated income, changes to loans for borrowers and execution of execution of a mortgage.
In the years after the housing accident, Ocwen grew and its competitors quickly grew when large banks auctioned out the loans that they managed in the middle of new expensive regulations.
One of the awards - 215 billion US dollars in the Bank of America home mortgages - was won in January 2013 by Wish's Rival National.On the day the corporate agreement was announced with the Bank of America, his measures rose by almost 17%.Her biggest day since the company was public almost a year earlier.communicateAt that time, the Wish's Company competed for the deal for the deal.
But loss was not a total loss for the desire.
Less than three weeks earlier, he bought 600,000 US dollars in Nationalastar.On the day the deal became public, Wish sold his shares and made a profit of $ 157,000.
In a call with the Prublica, Wish said that he does not remember that he bought Nationalastar.He said, "You can see them, but I have no memory" before I was down.
Steven Grossman is another manager who was lucky enough to buy shares in a company shortly before the purchase until Grossman sold it in 2008 for around $ 1 billion.He was after the sale and remained on the salary statement of the new owner Rock-Tenne until 2013.
ProPublica data show that Grossman often negotiated the shares of companies in the industry in the industry.He did not sell the company's shares in higher volumes than Temple inland, a Wavy Cardboard packaging company from Texas.
Many of Grossman's shops were observed, but only a few were as cheap in June 2011 as their purchases.On June 2, he bought $ 223,000 at Temple Inland shares.On June 6, he bought $ 428,000 more.
On the same day of the second and greatest purchase of Grossman, another paper company announced after the closed negotiation that it had tried to acquire the Temple Inland.The managers secretly negotiated the acquisition.
When the market was inaugurated the next day, Temple Inland shares fired the largest entry increase a day in over a decade.Grossman pulled quickly and returned by 37% in less than a week.
In an interview, Grossman fully played commercial measures.When IRS data documented their commercial activities and asked about the respective temple, Grossman said: "Since then I have not negotiated any measures."He continued to negotiate.He never worked for the buyer Rock-Tenne in 2008.But his tax data show that he was the Tenn Rock at the Payroll until 2013."They paid me, but they never used my services," said Grossman.I don't know about acquisition negotiations in which the Temple Naland was involved when he bought shares."With that he put on.
methodology
Data background and restrictions
If an investor sells stocks, securities or other securities via a broker, the company usually has to issue a tax form1099-b, in which various information about the transaction, including a description of the active person sold, the sales product and the date of the sale, millions of these records are described, part of a larger series of data records that formed the basis of the propublica series."IRS Secret -Data.”
The PROPUBLICA database does not contain a complete image of all negotiations from or for investors.For example, investments by a separate legal person as a partnership are not included.In addition, forms 1099-B are created when a asset is sold, not when buying.However, many records were listed, the date on which securities were bought.
The data record covers about two decades.Recent annual negotiations usually contain further information because the disclosure requirements have increased over the years.This additional detail enables the propylter to better determine the success of people in our stock market data.For the stocks bought before 2011.The brokers had to indicate the date on which it was sold and the overall product was generated, but not the price paid.
These changes in disclosure have also affected how certain types of negotiations occur in the data.This includes the sale of discoveries in which an investor took action in action, shares are borrowed and the transaction then "closes" by replacing a number of shares, the shares you expectPrice to be.IRS previously demanded that the brokers only issue a 1099-B open laid. The campaign changes in 2011, the agency asked the brokers to send information about the closed short film and the date on which it was closed, and theGeneral profit, but no longer the date on which the short film was inserted.By 2014, option negotiations also had to negotiate.be reported more in more detail.
Sometimes it was easy to identify sales and short options, for example a field in the 1099-B The Prublica performed experts and subjects themselves to determine the type of these negotiations.
When we analyzed the records
In order to evaluate how the price of an action has changed after a investor bought or sold shares on a certain date, the Prublica received a data record that has the price history for traded shares on the New York Stock Exchange, Nasdaq or the American shareDescribes values.We bite this data with the documented business documents in our IRS recordings.Reporter compared the final course of an action on the day when a closing course occurred after several different intervals of the trading days (5, 10, 20, 60 or 120 days).Final prices were usedCommon methodused byAcademic researchersThis examines the privileged information trade.
By calculating the price change after several time intervals, we were able to recognize the negotiations, which were almost carried out with considerable movements in the share price of a company.However, the prices of some securities are much more volatile than others, it was important to determine how anomalized these swings were.
We have the return of each individual trade with the complete distribution of the returns to this stock compared negotiated in the actions of their competitors was cheaper over certain time windows - if not all the more promptly.A manager, for example, sold shares on the day before the company from the shares of a competitor on the day before the company, the company, the company, the company, the company had its highest price in one day this year.
Prublica also examined what connections, if at all, the people with the companies they negotiated, interviews, reports, sec records, tax documents, court files, social media and other options.