[stygiansonic]

I know you joke about looking at credit card info, but it reminded me of this story[1] where fraud researchers at a credit card company (ab)used their access to credit card transactions of their customers in order to mine the data and perform fundamental research about various companies' retail performance.

They then used this information to trade on the companies just before earning release, and made a lot of money. They were eventually caught by the SEC because their trading was deemed suspicious, i.e. their options bets always seemed to work out.

1. http://www.bloombergview.com/articles/2015-01-23/capital-one...

[pmarreck]

So basically, they did their homework and got penalized for it?

[ikeboy]

>Here, Bonan Huang and Nan Huang allegedly got the information from their employer, Capital One, which was supposed to have exclusive use of the -- hey, wait a minute, does that mean that Capital One was allowed to trade on this data for its own profit? Wouldn't that be amazing? Surely the answer is no: I assume that Capital One signed agreements with retailers (or rather, with Visa and MasterCard, which signed agreements with retailers) in which it promised not to disclose transaction data, or use it for nefarious purposes. Really anyone who used this data would be misappropriating it from, ultimately, Chipotle. Which gets to keep its sales data to itself. Except once a quarter when it releases that data and the stock jumps.

[pmarreck]

I see everyone's point, but they did write one hell of a SQL statement, and having written a few of those in the past (seems typical with ANY kind of "report" for some reason), it's too bad they got penalized for it instead of just reprimanded/most (but perhaps not all) of the profit confiscated. cleverness, if not overtly malicious, should not be penalized too harshly IMHO

[pmarreck]

If I set up cameras with visual recognition software in front of a statistically significant number of Chipotle branches to count the number of customers and base pre-earnings security purchase decisions on that, have I committed fraud? What they did seems equivalent to that, in a way.

I mean, that's basically a company idea right there, if someone hasn't already done that

[ikeboy]

It's not equivalent because the data was given to them under certain terms that preclude such uses.

[michaelbuckbee]

For a long time satellite imaging of things like WalMart parking lots (used a proxy for sales) have been a thing analysts and traders look at.

[uxp]

It's still a different scenario. Cops, up until a few years ago, used to think they could stick GPS devices on people's cars without a warrant because they were legally allowed to tail and observe people driving in vehicles without a warrant. The GPS device, like a lot of technology, allowed them to "observe and tail" hundreds of vehicles all at once.

The SCOTUS stepped in and said that the practice was illegal without a warrant because, despite a vehicle moving around a city in plain and public view, being allowed to monitor hundreds or even thousands of vehicles from a central location with only a handful of officers was outside of the scope that allowed them to hop into a vehicle and follow someone else, which would require hundreds of officers and hundreds of vehicles observing with their own eyes.

It's the same idea. Getting access to data that is not public (in reference to the credit card transaction data, not satellite imagery), in order to profit from a publicly traded stock, does not create a level playing field. Semi-realtime satellite imagery, on the other hand, may not be completely public, but it's publicly available data (with a fee, possibly, from the operators of the satellites, which is a device or technology that wasn't built to specifically observe walmart parking lot capacity). I would argue that it's still a grey area, as you can only interpolate sales based on a tangental dataset like parking lot capacity. But getting access to actual transaction history from the stores is a direct correlation to their sales and revenue model, which drives their eventual stock price.

I don't see how anyone could argue that they were "just doing their homework". They were subverting a system for financial gain. They weren't taking data that anyone could obtain and doing a novel approach to interpret tangental sales figures.

[stygiansonic]

If, by "homework", you mean fraudulently/inappropriately obtaining information from their employer in order to profit from it, then yes, I guess they did their homework.

I'm not detracting from the effort and skill they demonstrated in their endeavor, (which IMO was substantial), but the amount of effort and skill put into an activity doesn't necessarily determine criminality/inappropriateness or lack thereof.