TL;DR
Reddit’s top lawyer dumped half his stock right before bad news broke, leaving investors wondering if he knew something they didn’t. Classic case of insiders profiting while others may be left with losses.
Story
Reddit’s Chief Legal Officer, Benjamin Seong Lee, sold half his company shares ($14.5M) a day after news of a UK investigation into Reddit’s handling of children’s data. Coincidence? Maybe. But it reeks of rats fleeing a sinking ship.
How did this happen? Simple. Executives often have insider knowledge. Like knowing a storm’s coming before the weatherman. This info asymmetry lets them jump ship while everyday investors are left holding the bag.‣ Info Asymmetry: When one party has more info than the other.
Think Enron. Execs sold stock knowing the company was built on lies. When the truth emerged, investors lost everything. History doesn’t repeat, but it often rhymes.‣ Enron: An energy company that collapsed in 2001 due to accounting fraud.
While some say Lee’s stock sale was pre-planned, the timing stinks. It’s a harsh lesson: Trust no one, especially in the opaque world of finance. Big players protect themselves first. Always. This story echoes the 2008 crisis, where banks profited from risky bets while taxpayers footed the bill. Who really suffers? Everyday people like you and me, who trust the system.
This story reinforces a sad truth. Corporate structures reward insider trading. Those close to the top profit, those further down are punished by market forces. Those on the top floor have golden parachutes, those below jump without one.
Don’t be naive. Big companies aren’t your friends. They’re machines designed to make money, even if it means throwing you under the bus.
Advice
Blind faith in corporations is financial suicide. Question everything. Research before you invest. And never assume those at the top have your best interests at heart.