Remember a few years ago when Capital One employees got fined for insider trading?
The SEC sued colleagues Nan Huang and Bonan Huang in January 2015 alleging they made hundreds, if not thousands, of keyword searches on their company’s private database for sales data on at least 170 publicly traded companies from November 2013 to January 2015.
Nan Huang did not deny using Capital One’s non-public information, which the company’s policies forbid.
Capital One had access to rich consumer data which rogue employees used to predict earnings releases. Linkedin has data about employees of companies which is less specific, but equally powerful in its own way. Trends in hiring are surely leading indicators of company success / failure.
I don’t mean to pick on LNKD. Facebook has a store visit feature in their ad network and also integrates conversion tracking. Google used to claim their search data could predict the flu – can it also detect when wall street has the flu? Plus they have a point of sale payment product and consumer location data.
Uber’s Greyball project isn’t about insider trading but what you can do with a large consumer dataset. Uber used theirs to deny “ride requests to users who are violating our terms of service” and “opponents who collude with officials on secret ‘stings’ meant to entrap drivers”. I suspect ‘collude with officials’ = ‘work for the government’ in this case. I’m not commenting on the legality of blocking undercover investigations, but if employees are using god mode to trade stocks they should get investigated and fined.
The SEC can be GDPR-light
I don’t have a moral opinion about insider trading, but as long as it’s illegal we should regulate trading stocks by anyone who has access to large non-public consumer datasets. Equity analysts are subject to personal trading restrictions in their sector. Everyone with data access at FB should be too.
It’s my opinion that large consumer datasets enable bad actors to violate social norms, and that consumers are only beginning to understand this post Cambridge Analytica. These violations happen more frequently than people know because they’re usually kept secret by the perpetrators.
We have to find ways in which these databases violate our existing social expectations i.e. the law. Insider trading rules can be a tool in this toolbox.