Monday, January 27, 2020

"Michael Avenatti searched 'Nike put options' and 'insider trading' before allegedly trying to extort the sportswear giant"

Obviously not Familiar with Professor Levine's work on this subject.*
From Business Insider:
  • Lawyer Michael Avenatti searched for "Nike put options" and items related to "insider trading" online before his alleged extortion of the company for up to $25 million, according to a court filing dated January 24.
  • Avenatti represents Gary Franklin, who accused Nike of hiding illegal payments to college basketball recruits.
  • The attorney also visited the Nasdaq's website for Nike stock to find prices for options contracts, Fox Business first reported.
  • Avenatti didn't trade Nike stock and isn't charged with insider trading.
Famous attorney Michael Avenatti may have been looking to profit from trading Nike stock options before his alleged extortion of the company for up to $25 million, a court filing dated January 24 revealed.

Avenatti represents Gary Franklin, who accused Nike of hiding illegal payments to basketball recruits. The lawyer searched "nike put options" and items related to "insider trading" on March 10 and after taking Franklin's case. Avenatti also visited the Nasdaq's website to monitor Nike's stock price and find pricing for options tied to the sneaker giant's stock.

The internet searches took place less than two weeks before Avenatti was arrested and charged with federal extortion and bank and wire fraud. Federal prosecutors allege Avenatti threatened to publicize accusations that Nike illegally paid families of college recruits unless the company paid him and another lawyer between $15 million and $25 million to conduct an internal investigation.
The attorney isn't charged with insider trading and did not trade Nike stock.

Fox Business first reported on the latest court filing and the web searches.

Avenatti attorney Scott Srebnick motioned to exclude the searches from evidence in the case against Avenatti, calling them "irrelevant" to the case.....MORE

*That's Matt Levine who writes at Bloomberg in addition to tickling my funnybone.
 
Disclaimer: None of this is legal advice.

§ Laws of Insider Trading
  1. Don't do it.
  2. Don’t do it by buying short-dated out-of-the-money call options on merger targets.
  3. Don’t text or email about it.
  4. Don’t do it in your mother’s account.
  5. Don’t do it by planting bombs at a company and shorting its stock.
  6. Don’t do it while employed at the Securities and Exchange Commission.
  7. Don’t Google “how to insider trade without getting caught” before doing it.
  8. If you didn’t insider trade, don’t forget and accidentally confess to insider trading.
  9. If you are going to insider trade, do it in a company that is far away from a Securities and Exchange Commission office. Like, physically.
  10. If you are already under a federal ethics investigation about your ownership or promotion of a stock, don’t insider trade that stock.
  11. If you are planning to insider trade, probably don’t keep a Google Doc spreadsheet of the Money Stuff Laws of Insider Trading. That will definitely show up in the SEC’s complaint against you. If you’re gonna insider trade, you have to keep track of these rules in your head, even at the risk of forgetting a few now and then.
  12. If you insider trade by buying short-dated out-of-the-money call options on a merger target, and the SEC freezes your profits, don’t show up in a U.S. court to ask for them back.
    • Corollary: go ahead and show up in court to ask for them back as long as you’ve deleted all the evidence first.

§ Additional Information

See Section 10b5, which clarifies the SEC's stance on insider trading with material nonpublic information.
This site was inspired by Matt Levine's Money Stuff articles, where insider trading and how not to do it are a recurring theme.

https://lawsofinsidertrading.com/.
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