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Former AT&T executive pleads guilty to insider trading charges

By Leeky
Jun 19, 2012
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  1. Former AT&T marketing executive Alnoor Ebrahim pleaded guilty to charges of conspiracy to commit wire and securities fraud on Monday, following a US government investigation into an insider-trading scheme in which he leaked sales information about iPhone and BlackBerry smartphones…

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  2. psycros

    psycros TS Evangelist Posts: 1,323   +709

    Makes you wonder if all he did was provide inside info or use his position to help pick the winners. Certainly AT&T has went out of its way to push the iPhone at the expense of everything else it sells, while at the same time carrying no Android devices that compare directly to a Blackberry.
     
  3. gwailo247

    gwailo247 TechSpot Chancellor Posts: 2,011   +18

    That's basically what insider trading is.
     
  4. Tygerstrike

    Tygerstrike TS Enthusiast Posts: 827   +93

    As someone who works in the cellphone industry, I really dont see how the leak of information of that type warrents any real punishment. Its like telling one Banker what fruit and how many another supermarket sold last week. Its not terribly propriatory. Maybe Im not savvy enough to understand the full effects that such information leaked would cause. I could see if it was information that went to another major carrier, but it didnt. All that information imparts is what the consumer has been buying and is likely to buy given any certain trend. Trends I might add that change on a whim and as quickly as the newest flashiest commercial.
     
  5. Watch Trading Places; by getting insider information (information before it's released to the public) you can make better informed decisions.

    Let’s say you see that Widgets keep going up in price and Company A’s stock is climbing. You may want to invest in Company A. What if you found out though a high level employee at Company B before any public notification, that they just got awarded Company A’s widget contract. Which company are you going to invest in? Is it fair that you received this information before any public announcement? What happens to all the other investors that didn’t have this information?

    Investing is kind of like gambling, to make it legal and fair, we need some rules in place. One of them makes insider trading illegal.
     
    gwailo247 likes this.
  6. gwailo247

    gwailo247 TechSpot Chancellor Posts: 2,011   +18

    I think that part of it has to to with the level at which you are operating. There are probably all sorts of additional pieces of data which may make a difference about demographics of who is buying the phone, the trends they're seeing, what AT&T's orders will be for next year, whether sales are better/worse/as expected, there is tons of information that makes sense to the right person. Even information that would make a stock rise or fall a few dollars for a short time can be very valuable to the right person.

    So if sales figures for the past quarter are about to be released, and they're very weak, and the stock usually drops when this happens, shorting sufficient numbers of a stock can make someone millions. I'm sure this happens constantly, but catching people is the problem.
     
  7. davislane1

    davislane1 TS Evangelist Posts: 3,547   +2,346

    @Tygerstrike

    By divulging how many phones the company is moving for Apple et al. the insiders can make easy money by taking positions in applicable stock ahead of announcements and then quickly dump the shares before the market settles down and reap a pretty nice reward. For example, if the iPhone sales start to slow AT&T is going to be one of the first entities to notice since they hold inventories. Insiders get the information ahead of the news, short large quantities of AAPL, and anyone long ahead of the headlines or economic announcements gets stuffed while the insiders make a nice, virtually risk-free pay day. Same thing if they can't keep the phones on the shelves: take on larger than normal long positions, wait for Apple to report record sales next week, dump them a few minutes or a couple hours after the announcement.
     

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