Carl Icahn dumps $31M in steel-related stocks before White House tariff talks

http://www.latimes.com/business/la-fi-carl-icahn-trump-tariffs-20180302-story.html

by blondie9x • 8 years ago

108 28 8 years ago

latimes.com

curiousgal• 8 years ago

Didn't Martha Stewart go to prison over something like that?

tachyoff• 8 years ago

She wasn’t powerful enough to avoid the consequences.

joe_the_user2• 8 years ago

The parent's point deserves consideration

Martha Stewart wound up being prosecuted for "obstruction of justice" and "conspiracy", the go-to offenses when prosecutions otherwise hit a wall.

Stewart's prosecution came at time when insider trading appeared common and when regulators were looking for a visible victory. A celebrity prosecution gets a lot of press without actually angering people with real power. Stewart was a mere millionaire, not a multimillionaire or billionaire.

Edit: Well, I stand corrected, she was a multimillionaire at the time. Still it's hard not to see her as relatively small potatoes in the world of stocks.

https://www.thoughtco.com/martha-stewarts-insider-trading-ca...

tristanj• 8 years ago

Technically no. Martha Stewart went to prison for making false statements, conspiracy, and obstruction of justice. She was never charged with insider trading.

mikestew• 8 years ago

To summarize, Martha Stewart went to prison for lying to Federal authorities. [0] Securities fraud was not part of what she was found guilty of, AFAIK. I dunno, much like someone here said about Icahn, you think she's risking prison for a loss of less than $50K? I don't have nearly her money, and I wouldn't.

[0] https://en.wikipedia.org/wiki/Martha_Stewart#Sentence

joe_the_user2• 8 years ago

Icahn, unlike Stewart, is a professional stock speculator. There's every reason to think a speculator makes their money "running their connections".

Moreover, if anything, Stewart's manifestly unfair and abusive case shows prosecutors choose their examples based not on how dirty the target is but rather how convenient they are. Those who go down, don't go down based on how much they break or skirt the law but based on their connections to power failing.

djsumdog• 8 years ago

I was really surprised when I discovered this. Intentionally lying to a federal agent about anything material is grounds for criminal charges. Technically even a postal inspector. The police can lie to you all they want, but if you lie to a FBI agent in a line of questioning, it's not covered under the 1st amendment. It's not considered freedom of speech.

JudasGoat• 8 years ago

I suspect with the present government He is "too big to fail".

sehugg• 8 years ago

Not the first time he's been accused: http://www.latimes.com/business/la-fi-icahn-insider-trading-...

cyphunk• 8 years ago

that is a year old. I'd be curious the result of that accusation. I'm happy to prove Icahn is an evil __whatever__ but also it's a good chance to calibrate my desire to avoid silly liberal witch hunts, which as a self-identified libtard I have sometimes mistakenly joined.

bertjk• 8 years ago

Title should say "steel-related stocks", not "steel stocks". Steel companies are doing great as a result of the news. The stocks he dumped were for those companies whose business depended heavily on cheap steel supplies.

lambdasquirrel• 8 years ago

There’s a lot of this that reeks of the Great Leap Forward, e.g. when Mao had the peasants kill sparrows because they ate grain seed after plantings. The U.S. economy may be more resilient than post-war China’s... but one can’t help but wonder how this will turn out.

tdeck• 8 years ago

Mao also had people melt down their woks to produce "backyard steel". Predictably the result was unusable and everyone was out a wok. https://en.wikipedia.org/wiki/Backyard_furnace?wprov=sfla1

nyolfen• 8 years ago

https://pbs.twimg.com/media/DXTHmjpU0AA38Fw.jpg

https://pbs.twimg.com/media/DXTHoeAUMAA-gCE.jpg

vinhboy• 8 years ago

Do you really think he would risk something like this for a measly $31M investment? The guy is worth like $17B.

Maybe this is why I am not rich. I just don't have the right mindset.

EggsOnToast• 8 years ago

I've always wondered if after a certain point the numbers quit mattering and it's more about the principle of doing good, which is to say optimal not necessarily ethical, business.

InclinedPlane• 8 years ago

Answer to the first: absolutely yes. Answer to the second: yup, rich people typically look for how to game every system and gain every advantage they can.

pasbesoin2• 8 years ago

There's a certain reputation -- I gather, not undeserved -- for rich people being some of the most tight-fisted you'll find. At least, some rich people.

Also, all humans have it in their nature to test limits. And what we are seeing, among some of the wealthy and would-be wealthy in the U.S., is that with each egregious behavior, particularly financial and economic, the worst they face is a fine that most often represents a fraction of their profit from the behavior.

So, yes, I can see this. Get rich by not giving any money away unnecessarily, practiced diligently and relentlessly over years and decades, combined with the lesson that you won't be punished -- at least, not significantly.

So, why "waste" 31 million?

I don't know that this is what happened. But I can imagine it.

sumedh• 8 years ago

Someone asked Warren Buffett if he would pick up a penny on the street, he said yes.

icantdrive55• 8 years ago

I live among the wealthy. I live in a little enclave called Marin County.

I'm not one of them, just service their stuff, usually with them watching me.

I'm constantly astonished over just how frugal they are. Their bodies are decaying, but as long as the assets grow; they seem happy.

Actually, many are lonely. Their kids just use them. People treat them nicely because they just might need them one day, and they know they are being placated.

They break laws to save a few dollars, while drowning in seemingly unending wealth?

The crimes are usually hidden, like hiring immigrants under the table--not even paying minimum wage, or shoplifting from Nordstrums. (I heard bigger department stores will not prosecute the better spenders. They will detain, and look up how much they spent in the past. If enough, the cops are not called.)

SEC/Taxes--it's just a game when you have the money to get out of a sticky situation. I can afford to break the law is part of the problem?

This is why I feel it time to tie Fees/Fines to Income.

I grew up around them, and they are different when they think no one is looking, or they think they can get away with with it.

I'll get hammered for bringing up the differences between the "classes", but I'm tired of glorification they get.

Buffet is one of the few I do like though.

cepth2• 8 years ago

Keep in mind the scores of business icons who have been caught insider trading seemingly insignificant amounts of money.

Martha Stewart “avoided a loss of $45,673 by selling all 3,928 shares of her ImClone Systems stock on December 27, 2001, after receiving material, nonpublic information from Peter Bacanovic, who was Stewart's broker at Merrill Lynch.” (wiki)

The Galleon Group case ensnared Rajat Gupta (former head of McKinsey), who provided insider information that helped Galleon Group net a $17 million profit by tipping them off about Warren Buffett’s investment into Goldman Sachs during the 2008 financial crisis. Galleon Group’s owner, Raj Rajaratnam was a billionaire at the time of the insider trading.

SAC Capital (Stephen A Cohen’s firm, now known as Point 72) was charged with using insider information to generate $275 million in profits and averted losses. Cohen is a multi billionaire.

I recommend reading The Chickenshit Club. Given the institutional and resource constraints on regulators and prosecutors, the odds that you actually are punished are slim. Leaving aside any potential political machinations, behavioral economics resource has shown that humans generally value avoiding losses much more than making more money. Behavior like the endowment effect comes into play here. Bottom line, what may seem like pocket change for billionaires may cause “irrational” behavior.

dforrestwilson2• 8 years ago

Galleon and SAC Capital are not good examples. Their entire business models are built around gathering insider information and profiting.

These 2 instances in which they caught red-handed were simply the strongest cases that the U.S. government could bring.

Cohen is a multi-billionaire because he built a business which is designed to launder insider information into "clean" information without implicating himself or his lieutenants.

ghufran_syed• 8 years ago

This isn't really meaningful unless we know what proportion this is of his portfolio, what other trades he did over the last year, and what other positions he still has - all of which the SEC has access to. So I'll believe it when there is an actual court case

Carl Icahn dumps $31M in steel-related stocks before White House tariff talks

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