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Insider trading rarely seems worth it

We always read about the big stories of insider trading but sometimes it’s the small anonymous insider trading cases that surprise me.

U.S. SEC, federal prosecutors charge former Netflix staffers with insider trading [Reuters] – “The SEC’s complaint, filed in federal court in Seattle, charges the streaming service’s ex-staffers with violating antifraud provisions and trying to evade detection by using encrypted messaging applications. It also found that the staffers exchanged the information with relatives and friends so as to receive cash kickbacks in advance of several consecutive Netflix quarterly earnings, the SEC said.” It “only” generated $3 million in total profit but got on the radar of investigators.

The other thing that surprises me is how people with so much are willing to risk it for so little. As Netflix engineers, they probably made some pretty good money. At whatever they were doing next, they probably were making good money. These aren’t people scraping by… but they’re willing to risk it for this? Don’t they know the only way to do this without risk is to get elected to Congress first? 🙂

Reminds me of the even sadder insider trading story of Rajat Gupta. A literal rags to riches story that sadly includes a 2 year imprisonment.

I’ve been critical of this series by ProPublica, especially when they published details of specific individuals for no apparent reason other than to entice clicks, but this article was a useful explanation of how shifting money from wages to profits (distributions) reduced taxes:
How the Trump Tax Law Created a Loophole That Lets Top Executives Net Millions by Slashing Their Own Salaries [ProPublica] – “The loophole already existed, in much smaller form, before the Trump tax overhaul. A government report in 2009 estimated the U.S. Treasury was losing billions to this strategy. Back then, an owner could save the Medicare tax by counting a dollar as profits rather than salary. But after the Trump law, the tax savings roughly tripled, to about 11%.”

A little scary but also a little cool, check out these Boston Dynamics robots doing “parkour:”

See you next week!