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Post by valueinvestor123 on May 20, 2016 11:12:35 GMT
Do Saving Stream (or other p2p companies for that matter) invest alongside investors?
I wonder if it's possible for them to start dumping loans that are about to default which would typically be looked at as insider trading as this information would only be available to the company. Sometimes I see 20-100k chunks coming onto the market and wonder who that is. Might be institutional.
vi123
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ben
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Post by ben on May 20, 2016 11:13:53 GMT
I think most of it whenbig chunks at the moment unless a new loan is coming is what people have brought and not paid for
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on May 20, 2016 11:15:25 GMT
Do Saving Stream (or other p2p companies for that matter) invest alongside investors? I wonder if it's possible for them to start dumping loans that are about to default which would typically be looked at as insider trading as this information would only be available to the company. Sometimes I see 20-100k chunks coming onto the market and wonder who that is. Might be institutional. vi123 about a month back and this came up in the conversation with Liam...
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Post by valueinvestor123 on May 20, 2016 11:18:30 GMT
The 'agendas' may align with us but only on the upside. If they have access to sensitive information before we do wouldn't they be dumping a whole load of bad loans before releasing the news to the public?
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on May 20, 2016 13:22:29 GMT
The 'agendas' may align with us but only on the upside. If they have access to sensitive information before we do wouldn't they be dumping a whole load of bad loans before releasing the news to the public? This was my concern. They could also hold back good looking loans for themselves and give themselves larger allocations on the pre-funding. TBH, if they go through the exact same process as us (i.e the SS website platform), then I can't see too much of a problem. Would they dump a loan on the SM if they have some prior information it was going to go bad? Well, yes I'm certain they would, but as before they play the same game as us with the SM; if the SM is static, then they are going to find it hard to get rid of bad loans.
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registerme
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Post by registerme on May 20, 2016 13:24:01 GMT
This is what a compliance department is for. And I would hope it be covered by the FCA authorisation process.
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mikes1531
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Post by mikes1531 on May 21, 2016 0:52:37 GMT
Would they dump a loan on the SM if they have some prior information it was going to go bad? Well, yes I'm certain they would... : You don't really mean that, do you? I sure hope not! Surely that would be considered insider trading, and people go to prison for that. It would be the end of SS/Lendy if they were caught doing that.
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on May 21, 2016 1:01:11 GMT
Would they dump a loan on the SM if they have some prior information it was going to go bad? Well, yes I'm certain they would... : You don't really mean that, do you? I sure hope not! Surely that would be considered insider trading, and people go to prison for that. It would be the end of SS/Lendy if they were caught doing that. It's hard to comment on the subject in too much detail, because the suggestion they do invest on the platform comes via an unrecorded conversation. The first question should be ( if they do hold investments), do they invest via the same methods as us (investing & selling on the saving stream SM & PM). However, even if they do, can they do so without having an unfair advantage of having inside knowledge? For argument sake, let's put any investor on the SS platform in the position, where they knew (before any other investor) that a loan was to go bad (i.e. default) do you not think they would not get rid of it as quick as they can... I know I would.
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mikes1531
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Post by mikes1531 on May 21, 2016 2:10:21 GMT
cooling_dude : You don't really mean that, do you? I sure hope not! Surely that would be considered insider trading, and people go to prison for that. It would be the end of SS/Lendy if they were caught doing that. It's hard to comment on the subject in too much detail, because the suggestion they do invest on the platform comes via an unrecorded conversation. The first question should be ( if they do hold investments), do they invest via the same methods as us (investing & selling on the saving stream SM & PM). However, even if they do, can they do so without having an unfair advantage of having inside knowledge? For argument sake, let's put any investor on the SS platform in the position, where they knew (before any other investor) that a loan was to go bad (i.e. default) do you not think they would not get rid of it as quick as they can... I know I would. I think a lot depends on where the info comes from. If you're local to the property and see it falling into disrepair, you have info that perhaps nobody else has, but I don't think that would be considered insider info because you're not an insider. Similarly, if you do a lot of DD -- or, for that matter, hire a private investigator -- and become convinced that the borrower is a crook, I still don't think that's inside info. If you then sold your parts on the SM and the loan subsequently went pear-shaped I don't think you'd have a problem. If, OTOH, you work for SS/Lendy and you see a letter from a borrower saying that their tenant has just vacated the premises leaving it in a poor state, and furthermore explaining how their (the borrower's) financial situation has deteriorated to the point where they're going to be unable to repay their loan because they don't have the resources, no other lender will refinance the debt, and the estate agents they've spoken with don't think they could sell it for as much as the amount owing on the loan... then I think you could find yourself in deep trouble if you then sold your parts of that loan before that info was made public. You'd get into similar trouble if you told another investor in that loan what you learned and they then sold their parts on the SM. Disclaimer: The above is just a layman's interpretation of insider info and the consequences of acting upon it. I have no qualifications whatsoever that would allow me to give any sort of 'opinion' on this subject.
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spiral
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Post by spiral on May 21, 2016 7:36:31 GMT
I posted a related issue on MT's board when a loan was to be repaid early. In this instance the buyer stood to gain from their actions as opposed to avoid a loss but MT confirmed that the buyer had no inside knowledge of the early repayment. p2pindependentforum.com/thread/4940/broadoak-loan-repaid-early-listedI think all platforms where investments are selective need to disclose the conditions under which they will/won't permit their staff to "trade". |
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Post by earthbound on May 21, 2016 7:46:56 GMT
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Post by chrisuk on May 21, 2016 8:35:34 GMT
This has always been a concern of mine.
Many years ago I worked for a large independent tv broadcasting company which had placed a bid to renew its franchise. Most of the staff had shares in the company. The Directors of the company convinced us that the bid was in the bag and to hold on to our shares. This was not true and unbeknown to the staff the Directors were busy selling their shares. Sure enough, several weeks later it was announced the company lost its franchise and the share price plummeted leaving the staff heavily out of pocket.
So in my opinion insider trading goes on all the time but it's difficult to prove. Or maybe I'm just an old cynic!!
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mikes1531
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Post by mikes1531 on May 21, 2016 13:55:41 GMT
Many years ago I worked for a large independent tv broadcasting company which had placed a bid to renew its franchise. Most of the staff had shares in the company. The Directors of the company convinced us that the bid was in the bag and to hold on to our shares. This was not true and unbeknown to the staff the Directors were busy selling their shares. Sure enough, several weeks later it was announced the company lost its franchise and the share price plummeted leaving the staff heavily out of pocket. So in my opinion insider trading goes on all the time but it's difficult to prove. Or maybe I'm just an old cynic!! An interesting example. And a way for the directors to avoid conviction might be to take the position that they had no info about whether or not the franchise would be removed, but they felt that the shares wouldn't jump up if the franchise was extended but would drop significantly if it wasn't. By selling early, if the company was successful they could buy back in and not lose much, but they'd avoid a big loss if it wasn't. On that basis, selling early had little downside and much upside, so it was a reasonable thing to do. The key to the success of such an argument would be that the decision to sell wasn't based on insider info, and that anyone who analysed the situation to any depth could have come to the same conclusion.
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Post by eascogo on May 21, 2016 17:58:44 GMT
... The Directors of the company convinced us that the bid was in the bag and to hold on to our shares. ... An interesting example. And a way for the directors to avoid conviction might be to take the position that they had no info about whether or not the franchise would be removed, but they felt that the shares wouldn't jump up if the franchise was extended but would drop significantly if it wasn't. By selling early, if the company was successful they could buy back in and not lose much, but they'd avoid a big loss if it wasn't. On that basis, selling early had little downside and much upside, so it was a reasonable thing to do. The key to the success of such an argument would be that the decision to sell wasn't based on insider info, and that anyone who analysed the situation to any depth could have come to the same conclusion. Of course such an argument could only hold if directors had kept stum and had not offered opposite guidance to their staff or anyone else.
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rogerbu
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Post by rogerbu on May 21, 2016 18:53:14 GMT
Do Saving Stream (or other p2p companies for that matter) invest alongside investors? I wonder if it's possible for them to start dumping loans that are about to default which would typically be looked at as insider trading as this information would only be available to the company. Sometimes I see 20-100k chunks coming onto the market and wonder who that is. Might be institutional. vi123 about a month back and this came up in the conversation with Liam... Yes this was my comment. From memory, it came up when Liam said that he had sold a substantial amount of loans on the SM to part fund the purchase of a house on the mainland following SS's move from the IOW. He was pleasantly surprised at how quickly the sales had gone through the SM and he had the funds needed compared to selling other types of investments. So yes, I understood that investing and dis-investing was using the same process we use. It didn't occur to me to ask how they manage any potential conflicts of interest if directors (or staff) invest as 'lenders'. However I didn't feel in any way uncomfortable that they have 'skin in the game', rather I felt that it aligned their agendas with ours. I understand that SS now have a on-staff solicitor, I would hope that one of his/her's duties would be to ensure that SS was not falling foul of any conflict of interest traps
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