5 ms·

Does anyone know if Twitter are allowed to legally frontrun the markets before making tweets publicly visible?

by odnes 6y ago

p1necone 6y ago
Almost certainly not, sounds like textbook insider trading to me?
- sjg007 6y ago
  Probably wouldn’t be. In any regard could sell an early access feed if they wanted and it’d be legit.
  - huac 6y ago
    https://developer.twitter.com/en/enterprise https://developer.twitter.com/en/enterprise
  - bpodgursky 6y ago
    They could do this, but then Twitter almost certainly wouldn't be considered a valid instrument for releasing financial data (as it is right now): https://www.sec.gov/news/press-release/2013-2013-51htm https://www.sec.gov/news/press-release/2013-2013-51htm
    - jameshart 6y ago
      THAT is a very interesting press release (and itself raises the slightly circular question: are SEC press releases considered a valid instrument for releasing legal guidance on how to comply with SEC regulations?). But: If the SEC regard Twitter as, to all intents and purposes, a neutral 'wire service', then that means the SEC allows Twitter users to assume - regardless of what Twitter's own ToS say - that Twitter distributes information fairly and impartially. Weirdly, it's not clear that the SEC has any way to regulate Twitter to ensure that they actually meet that assumption. If they were to discover, for example, that Twitter DID route interesting tweets to their in-house investment management team before publication, it's not obvious that the SEC could do much other than issue a press release saying 'sorry, looks like our advice about this was wrong, Twitter turns out NOT to be an impartial information distribution channel, please stop assuming it is.' I wonder to what extent the existence of that SEC guidance affects how Twitter and Facebook behave? Do they consider, when deciding to implement features that modify the flow of postings from publisher to receiver, whether they are creating a mechanism which contravenes the SEC's understanding that they implement a 'fair disclosure' mechanism? Should they? Should there be regulatory compliance reasons that oblige them to? And, per the SEC's guidance, this also applies to "social media outlets like Facebook and Twitter", whatever that means. Baidu, maybe? Is TikTok a legitimate channel to release material information? Do TikTok's engineers know that? This world we've built... it's really weird.
- bananabreakfast 6y ago
  This is, in fact, the exact opposite of insider trading. No one working at Twitter is also working at Tesla. Ergo, no insiders. Anything that Elon sends to Twitter is instantly considered public knowledge and its data belongs to Twitter. If they delay his tweets to make trades that's well within their rights.
  - bearzoo 6y ago
    actually, I think this is exactly what misappropriation theory is supposed to account for. can you explain more around why it is well within their rights? I don't think it is.
deleted 6y ago
[deleted]
DarthGhandi 6y ago
Are journalists and editors? You could make some pretty big moves just with a dramatic headline and a buried lede
mrandish 6y ago
I don't know if it's explicitly part of the regulations but as a former "insider" at a large publicly traded valley tech company, I can say that it's almost certainly against the rather all-encompassing wording of the shit I had to sign that enumerated all the "Thou Shalt Nots" from the regs (as well as watch the insufferably annoying 'compliance training' videos (with interactive quizzes!) Basically, it went far beyond all information about my employer to include ANY "non-public information" about any OTHER company that I might become aware of through my employment, whether directly or indirectly, including (but not limited to) any product plans, business strategies, etc (or lack thereof), I was prohibited from trading on or disclosing to any other person, yada, yada, yada. Since I had, at least, theoretical access to tons of customer data on our servers as well as forecasts based future contract negotiations with our many thousands of huge public co customers... per my attorney's advice, I just held all my company RSUs and put the rest of my portfolio on auto-pilot in a Boggle-headish standard blend of cheap ETFs and never traded any individual stocks. This happened to work out extremely well for me financially as well as simplifying my life and reducing my exposure to lawsuits and regulator scrutiny. It was a combo of luck and the fact that for ten-year time periods, that strategy is actually pretty good.
- netsharc 6y ago
  On the topic of yada yada yada, that was 3 paragraphs worth of bullshit just to say... argh I can't even bother trying to read it all to get the 5 word summary.
- jameshart 6y ago
  The rules that govern what individual employees are allowed to do privately with the information they come across in the course of their work which belongs to their employer are very different to the rules that govern what the company itself is allowed to do with the information it has access to. Of course you couldn't personally beneficially trade on information you accessed in the course of your employment (although primarily that would be a breach of your employment terms, not necessarily a breach of the law...) But that says nothing whatsoever about what you can do with that information to benefit the company.
teruakohatu 6y ago
Employees at Twitter would go to jail if they used Twitters information to trade. Journalists have gone to jail for sharing information about stories they are writing to third parties. But it is possibly legal for Twitter the organisation to do that or sell tweet "firehoses" to third parties. I would not be surprised if they had deal with with traders that gave them a firehose of tweets milliseconds before everyone else. There was an interesting case in the UK where a company that provided the audio feed for the Bank of England announcements fed the feed to hedge funds before everyone else heard it. https://news.sky.com/story/bank-of-england-cuts-audio-feed-over-hedge-fund-hijack-11890310 https://news.sky.com/story/bank-of-england-cuts-audio-feed-o... Edit: this is my uneducated opinion not legal advice.
- tptacek 6y ago
  They would? Are you sure about this? Can you cite an authority on it? I don't know either way, except that I know from years of reading Matt Levine that the laws on insider trading are a lot more complicated than you'd assume.
  - teruakohatu 6y ago
    I love Matt's views on the subject. At its core, as I understand it, the issue is who owns the information, and is Twitter licensed to distribute it as they see fit. https://www.quora.com/Securities-Law-Is-it-legal-for-a-journalist-to-trade-on-a-companys-stock-in-advance-of-the-release-of-a-damaging-story-about-that-company https://www.quora.com/Securities-Law-Is-it-legal-for-a-journ...
  - stanfordkid 6y ago
    I agree that a citation is needed ;) But in this case I think the case history points to OP being right, though you'd likely have to have a pretty egregious and clear pattern of such activity, and it would have to be deemed material information: https://www.reuters.com/article/us-sec-capitalone-insidertrading-idUSKCN0UR2KR20160114 https://www.reuters.com/article/us-sec-capitalone-insidertra...
    - 6y ago
jameshart 6y ago
It's not immediately clear to me that they can't. Twitter makes NO guarantees that they will deliver every tweet to all consumers simultaneously, or even at all. They don't guarantee they won't hold the tweet up while they decide how to process it - they certainly analyze tweets for content and automatically hold some for manual review, for example. So why on earth couldn't they accept the tweet, process the information in it, and make corporate decisions about how to, say, adjust their investment portfolio... before they put the tweet's contents out on the wire for the world? Is there anything in the ToS that says they can't act on the contents of tweets you send them? You shared the information with Twitter with the intent of publishing it to your followers - but the agent you handed the information to first was Twitter. There's a sci-fi black mirror kind of scenario in there, too... It's quite possible that if the president of the US were to declare war, the first place that information would reach outside the White House and Pentagon would be a Twitter HTTP service. Think about the responsibility the software that has to handle, route, and process that request bears. Think about the threat model the systems that software is part of need to consider, if that really is potentially one way it could be used. Worse still, it might not even be the 'send tweet' handler that gets notice first; the twitter client into which the message is being typed, sending back analytic data to help optimize its autocomplete suggestions or pushing data to the server so it will be ready to offer an appropriate gif to accompany the tweet, might be sending back the draft text of the announcement before the president hits 'Send'. So here's your story writing prompt: A Twitter engineer reviewing logs trying to track down a bug in the gif autosuggest algorithm chances across a series of requests from the president's iPhone in the last two minutes, containing text from a tweet being composed, that look for all the world like the drafting and redrafting of an announcement that the country is at war... What does Twitter do?
- rdruxn 6y ago
  This is remarkable. I would love to see this in black mirror
- arthurcolle 6y ago
  Block the tweet? It's like the USSR guy who decided that the early warning signal was incorrect, and prevented WW3. This idea of unilateral "freedom of speech" is beyond goofy - some actions that deliberately cause massive amounts of distress, even in the short-term, must be attenuated in some manner.
gnopgnip 6y ago
Arguably the information is not public until it is available to more than just twitter employees. And trading on non public info can be securities fraud.
siruncledrew 6y ago
If they were doing that, then they are not doing a very good job at it.

Does anyone know if Twitter are allowed to legally frontrun the markets before making tweets publicly visible?

by odnes 6y ago

Does anyone know if Twitter are allowed to legally frontrun the markets before making tweets publicly visible?

p1necone 6y ago

Almost certainly not, sounds like textbook insider trading to me?

sjg007 6y ago
Probably wouldn’t be. In any regard could sell an early access feed if they wanted and it’d be legit.
- huac 6y ago
  https://developer.twitter.com/en/enterprise https://developer.twitter.com/en/enterprise
- bpodgursky 6y ago
  They could do this, but then Twitter almost certainly wouldn't be considered a valid instrument for releasing financial data (as it is right now): https://www.sec.gov/news/press-release/2013-2013-51htm https://www.sec.gov/news/press-release/2013-2013-51htm
  - jameshart 6y ago
    THAT is a very interesting press release (and itself raises the slightly circular question: are SEC press releases considered a valid instrument for releasing legal guidance on how to comply with SEC regulations?). But: If the SEC regard Twitter as, to all intents and purposes, a neutral 'wire service', then that means the SEC allows Twitter users to assume - regardless of what Twitter's own ToS say - that Twitter distributes information fairly and impartially. Weirdly, it's not clear that the SEC has any way to regulate Twitter to ensure that they actually meet that assumption. If they were to discover, for example, that Twitter DID route interesting tweets to their in-house investment management team before publication, it's not obvious that the SEC could do much other than issue a press release saying 'sorry, looks like our advice about this was wrong, Twitter turns out NOT to be an impartial information distribution channel, please stop assuming it is.' I wonder to what extent the existence of that SEC guidance affects how Twitter and Facebook behave? Do they consider, when deciding to implement features that modify the flow of postings from publisher to receiver, whether they are creating a mechanism which contravenes the SEC's understanding that they implement a 'fair disclosure' mechanism? Should they? Should there be regulatory compliance reasons that oblige them to? And, per the SEC's guidance, this also applies to "social media outlets like Facebook and Twitter", whatever that means. Baidu, maybe? Is TikTok a legitimate channel to release material information? Do TikTok's engineers know that? This world we've built... it's really weird.
bananabreakfast 6y ago
This is, in fact, the exact opposite of insider trading. No one working at Twitter is also working at Tesla. Ergo, no insiders. Anything that Elon sends to Twitter is instantly considered public knowledge and its data belongs to Twitter. If they delay his tweets to make trades that's well within their rights.
- bearzoo 6y ago
  actually, I think this is exactly what misappropriation theory is supposed to account for. can you explain more around why it is well within their rights? I don't think it is.

deleted 6y ago

[deleted]

DarthGhandi 6y ago

Are journalists and editors? You could make some pretty big moves just with a dramatic headline and a buried lede

mrandish 6y ago

I don't know if it's explicitly part of the regulations but as a former "insider" at a large publicly traded valley tech company, I can say that it's almost certainly against the rather all-encompassing wording of the shit I had to sign that enumerated all the "Thou Shalt Nots" from the regs (as well as watch the insufferably annoying 'compliance training' videos (with interactive quizzes!) Basically, it went far beyond all information about my employer to include ANY "non-public information" about any OTHER company that I might become aware of through my employment, whether directly or indirectly, including (but not limited to) any product plans, business strategies, etc (or lack thereof), I was prohibited from trading on or disclosing to any other person, yada, yada, yada. Since I had, at least, theoretical access to tons of customer data on our servers as well as forecasts based future contract negotiations with our many thousands of huge public co customers... per my attorney's advice, I just held all my company RSUs and put the rest of my portfolio on auto-pilot in a Boggle-headish standard blend of cheap ETFs and never traded any individual stocks. This happened to work out extremely well for me financially as well as simplifying my life and reducing my exposure to lawsuits and regulator scrutiny. It was a combo of luck and the fact that for ten-year time periods, that strategy is actually pretty good.

netsharc 6y ago
On the topic of yada yada yada, that was 3 paragraphs worth of bullshit just to say... argh I can't even bother trying to read it all to get the 5 word summary.
jameshart 6y ago
The rules that govern what individual employees are allowed to do privately with the information they come across in the course of their work which belongs to their employer are very different to the rules that govern what the company itself is allowed to do with the information it has access to. Of course you couldn't personally beneficially trade on information you accessed in the course of your employment (although primarily that would be a breach of your employment terms, not necessarily a breach of the law...) But that says nothing whatsoever about what you can do with that information to benefit the company.

teruakohatu 6y ago

Employees at Twitter would go to jail if they used Twitters information to trade. Journalists have gone to jail for sharing information about stories they are writing to third parties. But it is possibly legal for Twitter the organisation to do that or sell tweet "firehoses" to third parties. I would not be surprised if they had deal with with traders that gave them a firehose of tweets milliseconds before everyone else. There was an interesting case in the UK where a company that provided the audio feed for the Bank of England announcements fed the feed to hedge funds before everyone else heard it. https://news.sky.com/story/bank-of-england-cuts-audio-feed-over-hedge-fund-hijack-11890310 https://news.sky.com/story/bank-of-england-cuts-audio-feed-o... Edit: this is my uneducated opinion not legal advice.

tptacek 6y ago
They would? Are you sure about this? Can you cite an authority on it? I don't know either way, except that I know from years of reading Matt Levine that the laws on insider trading are a lot more complicated than you'd assume.
- teruakohatu 6y ago
  I love Matt's views on the subject. At its core, as I understand it, the issue is who owns the information, and is Twitter licensed to distribute it as they see fit. https://www.quora.com/Securities-Law-Is-it-legal-for-a-journalist-to-trade-on-a-companys-stock-in-advance-of-the-release-of-a-damaging-story-about-that-company https://www.quora.com/Securities-Law-Is-it-legal-for-a-journ...
- stanfordkid 6y ago
  I agree that a citation is needed ;) But in this case I think the case history points to OP being right, though you'd likely have to have a pretty egregious and clear pattern of such activity, and it would have to be deemed material information: https://www.reuters.com/article/us-sec-capitalone-insidertrading-idUSKCN0UR2KR20160114 https://www.reuters.com/article/us-sec-capitalone-insidertra...
  - 6y ago

jameshart 6y ago

It's not immediately clear to me that they can't. Twitter makes NO guarantees that they will deliver every tweet to all consumers simultaneously, or even at all. They don't guarantee they won't hold the tweet up while they decide how to process it - they certainly analyze tweets for content and automatically hold some for manual review, for example. So why on earth couldn't they accept the tweet, process the information in it, and make corporate decisions about how to, say, adjust their investment portfolio... before they put the tweet's contents out on the wire for the world? Is there anything in the ToS that says they can't act on the contents of tweets you send them? You shared the information with Twitter with the intent of publishing it to your followers - but the agent you handed the information to first was Twitter. There's a sci-fi black mirror kind of scenario in there, too... It's quite possible that if the president of the US were to declare war, the first place that information would reach outside the White House and Pentagon would be a Twitter HTTP service. Think about the responsibility the software that has to handle, route, and process that request bears. Think about the threat model the systems that software is part of need to consider, if that really is potentially one way it could be used. Worse still, it might not even be the 'send tweet' handler that gets notice first; the twitter client into which the message is being typed, sending back analytic data to help optimize its autocomplete suggestions or pushing data to the server so it will be ready to offer an appropriate gif to accompany the tweet, might be sending back the draft text of the announcement before the president hits 'Send'. So here's your story writing prompt: A Twitter engineer reviewing logs trying to track down a bug in the gif autosuggest algorithm chances across a series of requests from the president's iPhone in the last two minutes, containing text from a tweet being composed, that look for all the world like the drafting and redrafting of an announcement that the country is at war... What does Twitter do?

rdruxn 6y ago
This is remarkable. I would love to see this in black mirror
arthurcolle 6y ago
Block the tweet? It's like the USSR guy who decided that the early warning signal was incorrect, and prevented WW3. This idea of unilateral "freedom of speech" is beyond goofy - some actions that deliberately cause massive amounts of distress, even in the short-term, must be attenuated in some manner.

gnopgnip 6y ago

Arguably the information is not public until it is available to more than just twitter employees. And trading on non public info can be securities fraud.

siruncledrew 6y ago

If they were doing that, then they are not doing a very good job at it.