How to do insider trading?

Insider trading is a really easy way to make money. Yeah, yeah, I get your pointless quibbles about how it’s “not right” and “unethical.” But do you want to make money or quibble about pointless shit like doing the right thing? And if you think insider trading is unethical, you’re an idiot. The reason I think insider trading is easy and profitable is that it’s pretty common in the markets. There’s a ton of data to show that.

But, the other reason why you should be insider trading is that it’s ridiculously hard to get caught. To catch you, the regulators not only need to show that insider trading happened but also prove intent. Financial regulators aren’t like police, they can’t tap your phones or kidnap you and waterboard you to get a confession—so it’s hard.

So a lot of insider trading goes don’t surface at all. The regulators also know this. So instead of going after everyone, they usually go after the big fish like Raj Rajaratnam, Rajat Gupta, Rakesh Jhunjunwala and Steve Cohen.

Let’s say you do some insider trading and get caught. You can be comfortable in the knowledge that you’re the stupidest person on the planet with an IQ of a Lays chips packet. Insider trading is like smoking weed, we all know everybody smokes even though it’s illegal. But only Aryan Khan gets caught.

But there’s a bigger reason why you should do insider trading. A lot of people think insider trading is wrong, but that’s a stupid logic, and here’s why. Markets become efficient when stock prices reflect all available information. So if people find more secrets and non-public information and trade based on that, stock prices will reflect that information. So markets will become more efficient which is good for everyone.

It’s your duty to do insider trading to increase market efficiency. Moreover, insider trading is a victimless crime. Nobody gets hurt. Insider trading is the only thing where you can have your cake and eat it too. Don’t listen to the idiots, start doing insider trading yesterday.

Given how easy insider trading is, I get shocked when people get caught. 9 out of 10 times, people don’t get caught because the financial regulators conducted some really deep investigation. They get caught because of some mindstunnig stupidity.

Say hello to Puneet Dikshit. Puneet was a partner at McKinsey up until he got caught for insider trading recently. The story of how he got caught will blow your mindhole.

At McKinsey, Puneet specialized in lending and digital payments. As a partner, he was pretty high in the food chain, and he had access to all sorts of confidential information. From late 2019 Puneet was part of a team that was consulting for Goldman Sachs.

Ok, before we go any further, please, someone tell me what consultants do. For the love of God, please, please, tell me. I don’t get it at all, Please. Tell me. Please?

In September 2019, Goldman Sachs was considering acquiring GreenSky, which provides buy now, pay later (BNPL) solutions to merchants. So, in November 2019, Goldman Sachs asked Puneet and his team to advise them on the deal, but the deal didn’t go through. In March 2021, Goldman ended the acquisition discussions.

The action in the BNPL space was heating up with a series of acquisitions, and Goldman was having a serious case of FOMO. So in May 2021, Goldman started hitting on GreenSky once again. Throughout this period, McKinsey was providing consulting services to Goldman for point-of-sale lending and also a potential GreenSky acquisition. In August 2021, Goldman formalized this arrangement and asked McKinsey, including Puneet, to help them with the GreenSky acquisition.

On September 9th, GreenSky told Goldman that they wanted to get married. Being the genius that he is, Puneet had been buying call options through August and September as he started feeling in his liver that the Goldman<>GreenSky wedding would happen. By September 10, Puneet had 188 GSKY call options.

Since Puneet was a partner, he had access to non-public price-sensitive information. But so far, he had only used that information to make small trades. On September 14, the Goldman board approved the acquisition and announced it on September 15. Now, Puneet’s stupidity was about to hit upper circuits.

On September 13, he bought 212 call options from his office computer. He transferred $10,000 into his wife’s account and bought 150 more call options on the same day. On September 14, he transferred $10,000 to his own account, sold 175 call options, and bought 2269 September 17 GSKY call options at a $10 strike price for $21,000.

Before the market opened on September 15, Goldman announced that it was acquiring GreenSky for $2.24 billion. The GreenSky stock rose 53% and closed at $11.90. After the market opened, Puneet sold 2481 call options which he bought for $23,100 in his account and made $449,128. He sold 150 calls option he had bought for $1,500 in his wife’s account and made $26,250. In total, Puneet made $450,000, a return of 1829%. Jim Simmons is the best investor my ass.

If there was a hall of fame for stupidity, just this would be enough for Puneet to get in. But Puneet is awesome. He wanted the world to remember his stupidity for centuries, and he was about to kick his stupidity into high gear.

Throughout this ridiculously dumb charade, Puneet was using his office computer to place orders. My lord, how can someone so high up in McKinsey be so stupid? My 7-year-old nephew uses a VPN if he wants to watch funny videos of Kanaga Ranaut, which his mom has banned. It doesn’t end there. The stupidity gets even more stupidly stupider.

Here’s the cherry on the cake. The dude even googled about insider trading on his office computer. He was googling about Rajat Gupta, who coincidentally was the former managing director of McKinsey. I mean, if you want to take inspiration on insider trading, who better than your alma mater?

The consultant made his trades using an account in his name and one in his spouse’s name, according to the SEC. Evidence of Dikshit’s insider trading was found on his work computer, prosecutors said. On the day before the GreenSky deal was announced, Dikshit used Google to search: “what happens to options when company is acquired” and “greensky market cap.” He also used it to check his broker’s web page for information about $10 GreenSky call options, they said.

Three weeks later, after news of suspicious trading in GreenSky options, Dikshit used his McKinsey computer to run searches about Rajat Gupta’s insider trading conviction.

As a slight aside, I think McKinsey has a separate division for insider trading. Just this month, it paid $18 million to settle another case of misusing no-public price-sensitive information. This time it was MIO Partners, a subsidiary of McKinsey which manages the money of McKinsey employees. It turns out some of the McKinsey partners were using insider information they had access to as part of their consulting activities to make investment decisions in MIO. Talk about thoughtful retirement planning!

The SEC’s order finds that McKinsey’s affiliate MIO Partners Inc. was investing hundreds of millions of dollars in companies that McKinsey was advising. Certain McKinsey partners oversaw MIO’s investment choices and also had access to material nonpublic information as a result of their McKinsey consulting work. These partners were routinely privy to confidential information like financial results, planned bankruptcy filings, mergers and acquisitions, product pipelines and funding efforts, and material changes in senior management at those companies.

Coming back to Puneet, how can someone be so stupid? Even a cursory google search and he would have discovered Fei Yan, a former scientist at MIT. Fei was as intelligent as Puneet and got caught for insider trading. The dude was googling “how sec detect unusual trade” and  “insider trading in an international account.”, what a moron:  

The Securities and Exchange Commission today announced insider trading charges against a research scientist who allegedly searched the internet for “how sec detect unusual trade” before making a trade that the agency flagged as suspicious through data analysis.

The SEC’s complaint alleges that Fei Yan loaded up on stocks and options in advance of two corporate acquisitions late last year based on confidential information obtained from his wife, an associate at a law firm that worked on the deals. 

Yan allegedly attempted to conceal his illegal activity by placing the illicit trades in a brokerage account bearing the name of his mother, who lives in China.  Among the internet searches he conducted was “insider trading in an international account.” 

Joseph G. Sansone, Co-Chief of the SEC Enforcement Division’s Market Abuse Unit, said, “As alleged in our complaint, Yan attempted to evade detection by researching prior SEC cases against insider traders and using a brokerage account in a different name, but we identified the profitable trades in deals advised by the same law firm and traced them back to him.”

Or he would’ve come across James McDermott Jr and Anthony Pomponio. Both were having an affair with Kathryn Gannon, a Canadian adult actress. James was the head of an investment bank, and he was giving insider information on mergers his firm was handling to both Kathryn and Anthony. YES, this is real. This isn’t a movie script.

Or he would have found the legendary Hemant Ghai, the former TV anchor of CNBC Awaaz. Hemant was as genius as Puneet and Fei. Hemant used to give stock tips on CNBC Awaaz. Before he gave them, he used to buy the stocks in his wife and mother’s accounts and then sell them after. What’s the secret of such a high IQ? Was my mom wrong to feed me Cerelac when I was young? How do I gain such superhuman intelligence?

Time and again, it’s Indians who get caught for insider trading. I had written about several of our people in this previous post. I have come to the conclusion that Indians have an insider trade gene. It’s our tradition.

The rules of insider trading are really simple

  1. Always do it outside. It’s the name!
  2. Never use electronic devices to communicate. Always use pigeons, it’s impossible for SEBI and SEC to find out. Or use Tinder Messenger.
  3. Never, ever, never use your wife, mom, girlfriend, boyfriend, or neighbours account. Always use your second cousin’s, third uncle’s wife’s account.
  4. Never ever pass insider information to a porn star you are having an affair with.
  5. Never, ever google “how to do insider trading” and “how not to get caught insider trading”. It’s generally a bad idea, I could be wrong.
  6. Don’t use your personal or office computer to do insider trading. Ever heard of a cybercafe, VPN, or Tor Browser?

Good reads you won’t read

Investing and markets

  1. Charles Ellis on the game you shouldn’t play and Fees Are Your Foe
  2. Michael Mauboussin Is Unshaken
  3. The Age of Funcertainty!
  4. This Will Not Last
  5. Betting Against Warren Buffett
  6. Book Review: Boom and Bust
  7. Will Cryptocurrency Protect Against Inflation?

Voodoo economics

  1. Long Live Participatory Socialism!
  2. Don’t Ask People Why Prices are Rising
  3. Not A Lehman Moment
  4. The Evergrande crisis, “common prosperity,” and the transformation of the Chinese growth model
  5. UK public debt stands at almost 100 per cent of GDP. History shows how to respond
  6. Big Business Declares War on Lina Khan

Venture & Techmology

  1. The bright new age of venture capital
  2. Adventure capitalism
  3. At Harvard, Cheap Wall Street Buyout Funds Take on a $4 Trillion Industry
  4. How Music Created Silicon Valley
  5. The Rise Of Many in Consumer Fintech
  6. Dangers of unregulated artificial intelligence
  7. Sometimes live audio apps for rich people…are worse


  1. Is Crypto Bullshit?
  2. What’s the Correct Valuation Model for Digital Assets?
  3. Crypto Wildcatters and the Future of American Politics
  4. Crypto design challenges
  5. The Token Disconnect
  6. South Korea and Japan grapple with how to define, and tax, cryptocurrency gains
  7. Doomsday Scenarios in DeFi Revolve Around Stablecoins USDC and USDT

World, life, planet, and we’re all going to die

  1. Rising above it all
  2. 17 Years Later: Has Shipping Done Enough on Carbon Emissions?
  3. Climate Fintech Is Fertile Ground For Seed And Early-Stage Deals
  4. Is society coming apart?
  5. China’s Search for Allies
  6. Russia Won’t Let Ukraine Go Without a Fight

Get all Tipsheets in your inbox💌

Leave a Reply