This is a real risk imo. We’ve been stonewalled by Apex. Questionable level of public oversight, given their market prominence. 💭

Michael Kimelman was a professional trader working on the Street in the 2000s. He was inspired to write a book by the trauma of having an FBI team swarm his house and family in the middle of the night (he was charged with insider trading after a $16,000 profit off a merger). He writes:

“there is no clear definition of what “insider trading” actually is… No statute spells it out. No law book provides a comprehensive accounting of its parameters. (When it came to my case, even the judge got confused.)” Additionally, Kimelman saw unusual volume in short-term far OTM puts shortely before Bear Sterns collapsed. He wrote: “I kept asking myself the same questions. Who bought the Bear Stearns puts? Who made hundreds of millions of dollars while Bear collapsed? Was it Goldman? If not them … who?.. The press release didn’t tell you that Hank Paulson had given JPM the weekend to come up with a deal, but was quite prepared to write Bear’s obituary otherwise. Someone knew, though. And from the prints left on the corpse, it was more than one person or firm. The only thing better than having friends in high places, is having friends in the highest places. It was beginning to look like a whole lot of people did.”

Since impactful insider information is based on big news, most of the egregious offenses can really hurt a select few investors writing what would otherwise be reasonable options contracts. In the Bear case, writing a $10 put expiring in a week on a $50 stock seems reasonable. But a few key insiders had priveleged information that made the decision worthy of liquidation (and very difficult to privately litigate without access to SEC trader surveillance data).