I think it's the big amount that really got himself redflagged by SEC. I mean if he wasn't that greedy and just a small amount, he might have fallen under the radar undetected but he must've bought massive shares to try to reap the profits well that's when you get caught and end up having nothing.
SEC Charges Chinese Citizens Who Reaped Massive Profits From Insider Trading on Comcast-Dreamworks A
- Thread starter dealmaker
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I think it's the big amount that really got himself redflagged by SEC. I mean if he wasn't that greedy and just a small amount, he might have fallen under the radar undetected but he must've bought massive shares to try to reap the profits well that's when you get caught and end up having nothing.
According to the SEC complaint, the volume was massive.
"During that three-week period in April, the five brokerage accounts collectively bought nearly 2.15 million shares in DreamWorks. Before April 4, 2016, the accounts had never traded in DreamWorks. Placed in context, the purchases by these five individual trading accounts — nominally owned by two elderly retirees, an electrical company employee, a teacher and a natural resources manager — accounted for 16.9% of all market trading in DreamWorks."
https://www.sec.gov/litigation/complaints/2017/comp-pr2017-44.pdf
I know the guy thought spreading his trades throughout 3 weeks would not raise any suspicions as his trades would be mixed in with other people's or institutions' transactions in the Dreamworks stock but I guess he didn't know or didn't bother to know how much interest were there for Dreamworks to realize that his accounts were probably the only ones buying and in such large amount that it just popped on investigators' radar.
Another thing is he probably didn't expect how poor ordinary American people are. I mean he's buying those shares as ordinary people and he forgot how many shares ordinary people usually buy even if they are aware of some special information; nobody would be able to buy 2.19 MILLION shares in 3 weeks. LOL And then the fact that none of those accounts had ever held shares in Dreamworks before really didn't help.
So like I said he could've still made some money if he hadn't bought that much shares like 5K shares each staggered at different times. 5K X 5 = 25000 shares at 43% gain would've been still pretty good gain. See this is where experienced in social human behaviour instead of being a pure number-crunching nerd would help.
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I know the guy thought spreading his trades throughout 3 weeks would not raise any suspicions as his trades would be mixed in with other people's or institutions' transactions in the Dreamworks stock but I guess he didn't know or didn't bother to know how much interest were there for Dreamworks to realize that his accounts were probably the only ones buying and in such large amount that it just popped on investigators' radar.
Another thing is he probably didn't expect how poor ordinary American people are. I mean he's buying those shares as ordinary people and he forgot how many shares ordinary people usually buy even if they are aware of some special information; nobody would be able to buy 2.19 MILLION shares in 3 weeks. LOL And then the fact that none of those accounts had held shares in Dreamworks really didn't help.
So like I said he could've still made some money if he hadn't bought that much shares like 5K shares each staggered at different times. 5K X 5 = 25000 shares at 43% gain would've been still pretty good gain. See this is where experienced in social human behaviour instead of being a pure number-crunching nerd would help.
He was blinded by greed, logic had gone out the window!
I know he must've been hypnotized real good by the $$ signs and the greenbacks that's showing in front of his eyes that he thinks there is no way he can be caught.
But another thing that I am puzzled at is WHERE did he get the money? All of his five accounts originated from Beijing China where it has one of the strictest capital control in the world where ordinary citizens are not allowed to exchange for foreign currencies let alone take money out of the country unless you are travelling abroad. And even if you are travelling abroad, you are only allowed $50K in foreign currency to spend. So HOW and WHERE did he find the money to buy 2.19 million shares on a US stock exchange?
I think he's got background. There is more to this story.
The guy behind the scheme had been using US-based brokers to allegedly trade on insider information since 2013. The complaint estimates that he made at least $49 million in profits in his US accounts since 2013.
He also maintained a residence in Palo Alto, so it's unclear if he ever repatriated any profits back to mainland China.
After discovering the Dreamworks trades and executing an FBI search warrant on his electronic devices while he was leaving San Jose airport for China, US law enforcement obtained an emergency court order that froze what was left in his US accounts.
I doubt all the details on this story are out yet, wait a few months and let's revisit....
I think Llxa was obliquely referring to the fact that someone in govt in China had to have been in on something of that magnitude. Agree with dealmaker, there's more to this story that we may or may not find out in the coming months.
Well if the gov. is REALLY behind this then they are going to want to suppress this and make it go away as quietly as possible. Just pay the fine, not fight the charges and just disappear. Look this guy hasn't even hired a lawyer yet facing such large charge. And apparently he's been in the investment business for 10 years and yet no lawyers? Not even a lawyer from his HongKong firm?