‘Real Estate Insider Trading’ Allegations Ignite From Amazon HQ2
December 6, 2018
Amazon’s decision to put a second headquarters in Long Island City in Queens, New York, has prompted a real estate frenzy, but one state senator wants to make sure it stays fair and legal. Sen. Michael Gianaris, a Democrat who represents Long Island City, is drafting legislation to prohibit the buying or selling of real estate based on any nonpublic government action. Under his proposal, such real estate transactions would become a felony and punishable up to four years in prison.
The move follows on the heels of a Wall Street Journal report that found several Amazon employees were shopping for condos in Long Island City before Amazon had announced its plans to open a new headquarters there. The employees allegedly were under contract for the units prior to the public announcement. Since Amazon made its announcement, home prices and demand have soared and reignited the once-sluggish condo market in Long Island City, as well as in Crystal City, Va., Amazon’s other pick for its new headquarters.
Gianaris’ legislation would be similar to federal securities law that ban individuals from purchasing stock in a company based on nonpublic information. “Insider trading is illegal in the stock market, but in real estate it is not only legal, but celebrated with champagne,” Adam Leitman Bailey, a real estate attorney, told the WSJ.
Amazon released a public statement on the matter: “We announced the locations to the employees at the same time as it was announced publicly. We employ more than 4,000 in NYC that live and work in the tri-state area. Amazon has no evidence that any employee who may have made a property purchase in the locations before the announcement had any advanced knowledge of the location selections.”
“After Amazon HQ2, Uproar in New York Over Real Estate ‘Insider Trading,” The Wall Street Journal (Dec. 3, 2018) [Log-in required.]
Updated: January 18, 2019