From: tcmay@got.net (Timothy C. May)
Date: Mon, 3 Jun 1996 05:10:40 +0800
To: cypherpunks@toad.com
Subject: Re: Saw this on CNN: Anonymous Stock tips over IRC as bad???
Message-ID: <add71e4c06021004bdfb@[205.199.118.202]>
MIME-Version: 1.0
Content-Type: text/plain


At 4:30 PM 6/2/96, Martin Minow wrote:
>>
>>One of the oldest tricks for running a stock up (or down) is
>>to put rumor teams on elevators in the financial district of
>>major cities.
>
>It would be more efficient to talk about the rumor on a cellular
>phone.  Probably make a nice sting scenario, too.

An interesting example, but I'm having a hard time figuring out who has
committed a crime, even by SEC rules.

Namely, are the people "talking up" a stock committing a crime? Even if the
SEC forbids this (under defined circumstances and for defined persons, as
most of us are not covered by any such laws), how can talking over a
"putatively secure" cell phone be construed as talking up a stock?

And, how can someone who acts on overheard information--as in the elevator
example Sandy cited--be charged with any crime? Unless they are "insiders,"
covered by SEC rules about trading, they are free to act on essentially
anything they hear. "He who hesitates to act on inside information is
lost."

(To elaborate on this: I was never classified as an "insider" during my
time at Intel, and I certainly bought and sold the stock based on what
products and news I knew was coming out or what rumors I'd heard. Only a
select group of executives and staff in the specific departments generating
earnings announcements, auditing, etc., were covered. And senior executives
are covered by various rules about trading stocks. And family members and
friends may be covered, if they learn of "inside" (in the SEC sense)
information. But ordinary people, even employees of a company, are not
considered to be "insiders" and hence are not covered by insider trading
laws.)

So, the only way I can imagine the cell phone case leading to an insider
trading charge is if the cell phone users _knew_ that the cell phones were
not secure, and _planned_ to have their conversations overheard. The people
doing the intercepting could be charged under one of the laws covering
unauthorized interception of cell phone conversations, but probably not for
insider trading.

--Tim May

Boycott "Big Brother Inside" software!
We got computers, we're tapping phone lines, we know that that ain't allowed.
---------:---------:---------:---------:---------:---------:---------:----
Timothy C. May              | Crypto Anarchy: encryption, digital money,
tcmay@got.net  408-728-0152 | anonymous networks, digital pseudonyms, zero
W.A.S.T.E.: Corralitos, CA  | knowledge, reputations, information markets,
Licensed Ontologist         | black markets, collapse of governments.
"National borders aren't even speed bumps on the information superhighway."