I don’t see how they are exploiting it. Let’s say you run two different strategies: one which is taking liquidity and one that provides it. Why wouldn’t you run the one that takes liquidity at zero commissions broker(assuming fill quality is the same)? And it’s my understanding that even with options there’s PFOF, so it’s not like the broker is doing clients any favors. I bet the zero commissions brokers actually greatly benefitted from the volume these guys were doing(it’s not like their flow was toxic or anything).
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Rebates on wash sales?
- Thread starter qlai
- Start date
And trading directly from one of your accounts to another at another brokerage is per se illegal under the law, regardless of if you actually manipulate markets or not.
Neither of the specific sections of the law that is mentioned in the SEC document per se says what you just claimed.
Do you have a reference for that?
Everything I see is based on intent. For example, NASDAQ's FAQ specifically says that liquidating a position and re-buying that position is ok.
A handful glaring problems here:They broke the law, they pay the consequences, full stop.
1) It is relevant because laws need to be unambiguous and applied equally.
This is a fundamental principle of American law:
https://www.law.cornell.edu/wex/equal_protection
It's kind of the whole point of even bothering to have a written set of laws.
2) It's relevant because I'm talking about the same regulatory bodies failure to go after obvious, in your face, large dollar value violations. This case seems like an obvious distraction from the real people they should be going after. The big firm that seems to be tied in with all the key players in the Gamestop debacle is the firm that lists Ben Bernake as a senior advisor.
3) I don't see what trying to hold Trump responsible to his employee's failure to pay their taxes has anything to do with "the law". It sounds to me like your position is "get in the way of what I feel is they way I want things to be, and I'll call you a criminal." The two examples I gave are at least related specifically to the SEC. You're just digging up random things and they aren't even very good...
4) GWB was actually arrested for his DWI, paid a fine and had his license suspended. $150 fine doesn't sound like much but that's $704 in today's dollars. Given that DWI laws weren't nearly as strict in 1976, I wouldn't be surprised if that was a typical sentence for a first offence (not involving driving off a bridge, killing someone and fleeing the scene.) At the time Maine didn't even have a per se OUI law.
5) Even the $150 that GWB paid is infinity times more than the fines Pelosi has paid for insider trading. And yes having your husband buy a bunch of Tesla call options right before a federal electric vehicle mandate is announced is obviously insider trading. And I don't know what your deal is with needing to white knight for Nancy Pelosi and her husband, but they are obviously shady as hell.
Spot on! It’s always some pikers with foreign sounding names lol2) It's relevant because I'm talking about the same regulatory bodies failure to go after obvious, in your face, large dollar value violations.
What you're proposing is perfectly legal. There's a limit to how much you can exploit the rebate in that case because your money is at risk in the transaction and you have to pay the bid ask spread to enter and exit. That's not what these guys were doing. They were trading an illiquid option where the bid ask spread was wide enough that they could ensure they were the best ask with their account at one broker and then hit that with their order from the other broker, then reverse it the same way. This transaction has no natural limiting factors. To use a Kant categorical imperative framework on this, if we universally did this or even if these guys were allowed to continue with impunity they could cycle billions through this in just a short period of time. Which is night and day from you and I strategically choosing which broker to do our trades with.I don’t see how they are exploiting it. Let’s say you run two different strategies: one which is taking liquidity and one that provides it. Why wouldn’t you run the one that takes liquidity at zero commissions broker(assuming fill quality is the same)? And it’s my understanding that even with options there’s PFOF, so it’s not like the broker is doing clients any favors. I bet the zero commissions brokers actually greatly benefitted from the volume these guys were doing(it’s not like their flow was toxic or anything).
Case law is important in the legal wold. Here is an interesting case where a guy did essentially exactly this, crossing orders from two accounts controlled by him (which by the way is completely different from liquidating and rebuying a stock, let's not insult anyone's intelligence and pretend thy are the same thing). The only difference in this case was that he was doing it to exploit broker margin requirements rather than exchange rebates, but everyone agreed he wasn't setting out to manipulate the market. If you look up "scienter" in the case you'll find that it determined that by basically by acting recklessly in a way that manipulates the market violates the market manipulation laws even if the intent wasn't manipulation. This is just one of many citations for this, if you're really interested rather than just being argumentative or pedantic I'm happy to find some more.Neither of the specific sections of the law that is mentioned in the SEC document per se says what you just claimed.
Do you have a reference for that?
Everything I see is based on intent. For example, NASDAQ's FAQ specifically says that liquidating a position and re-buying that position is ok.
A handful glaring problems here:
1) It is relevant because laws need to be unambiguous and applied equally.
This is a fundamental principle of American law:
https://www.law.cornell.edu/wex/equal_protection
It's kind of the whole point of even bothering to have a written set of laws.
2) It's relevant because I'm talking about the same regulatory bodies failure to go after obvious, in your face, large dollar value violations. This case seems like an obvious distraction from the real people they should be going after. The big firm that seems to be tied in with all the key players in the Gamestop debacle is the firm that lists Ben Bernake as a senior advisor.
3) I don't see what trying to hold Trump responsible to his employee's failure to pay their taxes has anything to do with "the law". It sounds to me like your position is "get in the way of what I feel is they way I want things to be, and I'll call you a criminal." The two examples I gave are at least related specifically to the SEC. You're just digging up random things and they aren't even very good...
4) GWB was actually arrested for his DWI, paid a fine and had his license suspended. $150 fine doesn't sound like much but that's $704 in today's dollars. Given that DWI laws weren't nearly as strict in 1976, I wouldn't be surprised if that was a typical sentence for a first offence (not involving driving off a bridge, killing someone and fleeing the scene.) At the time Maine didn't even have a per se OUI law.
5) Even the $150 that GWB paid is infinity times more than the fines Pelosi has paid for insider trading. And yes having your husband buy a bunch of Tesla call options right before a federal electric vehicle mandate is announced is obviously insider trading. And I don't know what your deal is with needing to white knight for Nancy Pelosi and her husband, but they are obviously shady as hell.
I couldn't agree more that the law should be equally applied. I happen to think that we should fix examples of powerful people getting away with breaking a law by holding the powerful people accountable. You advocated for allowing someone else to break a law once a powerful person has gotten away with breaking that law. The whole "if he got away with it than I should be allowed to" logic has a certain toddler level appeal, but it doesn't really work well in actual adult societies.
I do fnd it interesting the way you interpreted my comments on this. I in no way said that everyone shouldn't be held to the same legal standard. It's important to realize that you decided I said that even when I clearly did not. Apparently your brain did this because I picked examples from your political tribe, given that you then felt the need to defend the specific criminal behavior I cited (while you'll note I felt no need to do that with your examples). I'd be a little unsettled to realize my political views were bleeding into my personal views on morality like that, let alone my ability to actually listen to what someone said. You?
Last edited:
Case law is important ...
You claimed that trading between accounts was "per se" illegal. That would mean that there is a law that specifically says that trading between accounts is illegal. It wouldn't require a bunch of the interpretation and case law, the law would literally say you can't do it.
I wasn't expecting case law, but thanks for the citations all the same.
I couldn't agree more that the law should be equally applied. I happen to think that we should fix examples of powerful people getting away with breaking a law by holding the powerful people accountable.
On this we agree.
You advocated for allowing someone else to break a law once a powerful person has gotten away with breaking that law. The whole "if he got away with it than I should be allowed to" logic has a certain toddler level appeal, but it doesn't really work well in actual adult societies.
Actually that's EXACTLY how it's supposed to work in America. An unjust law is no law. If NYS passes a law that says no one can own helicopters, and then only certain politically connected people are allowed to break the law and own helicopters, then law should be tossed and regular people should not have their lives destroyed for violating it. If one does get prosecuted, the courts are supposed to toss it.
Furthermore, these unjust laws usually can't be effectively challenged until someone actually breaks them. Otherwise the courts will just claim that you lack standing.
If America actually worked they way you think it should, Rosa Parks and MLK would have spent their whole lives in prison.
I do fnd it interesting the way you interpreted my comments on this. I in no way said that everyone shouldn't be held to the same legal standard. It's important to realize that you decided I said that even when I clearly did not. Apparently your brain did this because I picked examples from your political tribe, given that you then felt the need to defend the specific criminal behavior I cited (while you'll note I felt no need to do that with your examples). I'd be a little unsettled to realize my political views were bleeding into my personal views on morality like that, let alone my ability to actually listen to what someone said. You?
A few points:
1) Regarding Trump, you tried to claim he had done something criminal without actually providing evidence. You tried to act as if somehow he was criminally liable for his employee's failure to pay proper taxes. That is not honest behaviour, and it's certainly not the standard that you seem to use for the Pelosi family.
2) You trotted out GWB's DWI which was full of fail. I don't even LIKE GWB... but the claim that he received special treatment for his DWI is really weak. You would have been much better off mentioning his military career that is much more suspicious. If it was up to me, everyone in the Clinton family and everyone in the Bush family would be barred from office.
3) It's also super dishonest for you act as if me pointing out that your examples were crap is somehow "defending criminal behaviour". There are tons of examples of politicians on both sides getting away with things. Don't take your failure to find a decent example out on me. I didn't say that GWB should drive drunk or that Trump's employees should cheat on his taxes and you know it.
4) I was curious why you jumped immediately to smearing a couple random republicans at my mention of Pelosi, so I looked it up. You have jumped into multiple threads, not just this one, to defend Pelosi and her husband:
https://www.elitetrader.com/et/thre...big-tech-purchases.360003/page-5#post-5420603
My conclusion is that you're absolutely fine with Pelosi's husband buying Tesla call options right before the announcement of a federal EV mandate. The timing, size and leveraged nature of the investment all scream insider trading.
So Per se simply means "by itself", meaning without requiring any additional elements. In this case, meaning intent to manipulate is not required, just engaging in the manipulative behavior is enough. Regardless of quibbling over definitions, it's clearly illegal to trade between your own accounts regardless of the reason why, that was my point if, again, you actually read my post.You claimed that trading between accounts was "per se" illegal. That would mean that there is a law that specifically says that trading between accounts is illegal. It wouldn't require a bunch of the interpretation and case law, the law would literally say you can't do it.
I wasn't expecting case law, but thanks for the citations all the same.
On this we agree.
Actually that's EXACTLY how it's supposed to work in America. An unjust law is no law. If NYS passes a law that says no one can own helicopters, and then only certain politically connected people are allowed to break the law and own helicopters, then law should be tossed and regular people should not have their lives destroyed for violating it. If one does get prosecuted, the courts are supposed to toss it.
Furthermore, these unjust laws usually can't be effectively challenged until someone actually breaks them. Otherwise the courts will just claim that you lack standing.
If America actually worked they way you think it should, Rosa Parks and MLK would have spent their whole lives in prison.
A few points:
1) Regarding Trump, you tried to claim he had done something criminal without actually providing evidence. You tried to act as if somehow he was criminally liable for his employee's failure to pay proper taxes. That is not honest behaviour, and it's certainly not the standard that you seem to use for the Pelosi family.
2) You trotted out GWB's DWI which was full of fail. I don't even LIKE GWB... but the claim that he received special treatment for his DWI is really weak. You would have been much better off mentioning his military career that is much more suspicious. If it was up to me, everyone in the Clinton family and everyone in the Bush family would be barred from office.
3) It's also super dishonest for you act as if me pointing out that your examples were crap is somehow "defending criminal behaviour". There are tons of examples of politicians on both sides getting away with things. Don't take your failure to find a decent example out on me. I didn't say that GWB should drive drunk or that Trump's employees should cheat on his taxes and you know it.
4) I was curious why you jumped immediately to smearing a couple random republicans at my mention of Pelosi, so I looked it up. You have jumped into multiple threads, not just this one, to defend Pelosi and her husband:
https://www.elitetrader.com/et/thre...big-tech-purchases.360003/page-5#post-5420603
My conclusion is that you're absolutely fine with Pelosi's husband buying Tesla call options right before the announcement of a federal EV mandate. The timing, size and leveraged nature of the investment all scream insider trading.
I would be curious to see citations on the legal theory that a powerful person violating a law nullifies that law for everyone else. That seems to be how you personally think it should work, but again most of us have gotten past the toddler stage of legal theory and don't think that, for example because Kennedy got away with Chappaquiddick no-one should be able to be prosecuted for manslaughter and all those with convictions for it should be pardoned! Speaking of odd examples, the whole helicopter thing is bizarre. Is that a serious problem, the common man being denied ownership of helicopter? Incidentally I've got a helicopter ATP and several thousand hours of flight time (on the military's dime), so your example is even funnier to me! And Rosa Parks, how exactly would nullifying laws because someone got away with violating them have helped her? You seem to be taking this whole non-starter of an idea of nullifying law into your general beefs with the U.S. legal system, do try to stay on track.
It is remarkable how you are able to read something someone wrote and then unilaterally decide that they said something completely different. While I'm flattered you decided to search my past posts, if you had actually read my posts, you would have found that I flat out said "Pelosi and her husband shouldn't be trading stocks" and also said I didn't like her and thought she was mean spirited and ineffective. How you decided that meant I was "absolutely fine with Pelosi's husband buying Tesla call options right before the announcement of a federal EV mandate." is simply baffling. Again it's interesting what you're brain is doing apparently without your awareness because of how much you've tied your identity to your political tribe. To be even more crystal clear on this, I think her husband buying options on a publicly traded stock was a horrible idea no matter the stock and that no congressman or senator should purchase anything but broad index funds in order to avoid exactly this type of issue. I think it would be hard to successfully prosecute someone from the legislative branch for inside trading on something the executive branch did more than a month later, especially when the President was simply implementing a policy that he publicly promised on July 14, 2020 he would put in place if elected. But that doesn't mean there shouldn't have been an ethics investigation and that Pelosi shouldn't have been prosecuted if there was evidence enough to do so. What it most certainly doesn't mean is that insider trading laws are now null and void for everyone.
Getting somewhat off topic on the employee compensation reporting, I run a business and I scrupulously report all of my employees' compensation, including fringe benefits as required by law, and would fully expect to be prosecuted if I did not, even if Trump or anyone else got away with not doing so. If you're unfamiliar with this requirement, you can read through IRS Pub 15-B here. I'm curious about your experience running a business and why you're not reporting fringe benefits for your employees and feel that this is simply an issue of their responsibility to pay taxes on those benefits?
Last edited: