The War on Insider Trading: Market-Beaters Beware

http://www.nytimes.com/2011/09/25/magazine/in-the-insider-trading-war-market-beaters-beware.html?pagewanted=all

by mootothemax • 15 years ago

1 1 15 years ago

ShawnJG• 15 years ago

I would first like to preface this by saying that I think insider trading is wrong. And individuals who blatantly and obviously take advantage of privileged private information for profit should be punished. However for most cases I find that the punishment far outweighs the crime. When bankers and CEOs on Wall Street manipulate the market for their own gains or cause industry crashes based on reckless behavior and ordinary people lose billions of dollars in net worth the Wall Street hotshot get to walk away Scott free. In my opinion I rather have a guy who purchased options on a tip in making money versus reckless money managers who lost his senior citizens entire life savings. The mortgage crisis was completely avoidable and most people agree that what companies did bordered on the illegal yet no one has been prosecuted for crime. These high-profile prosecutions by the SEC seemed to be just a bit of posturing to get the image polished in the news.

Martha Stewart and Mark Cuban for both in the same boat, bad knowledge that their investment was about to tank in there were about to lose money. What normal person would sit back and allow their money to go down the drain. Especially when information is not solicited by you. In both cases it seems someone came to them with the information they did not actively seek it out. How could you not act on that tip. I'm not crying for multimillionaires but it's hard to ignore the fact that any normal Joe blow citizen would do any differently. this is exactly the case with the factory workers. The chief mechanical executive was observant of his surroundings and concluded something was up. He was not involved in the deal, no one came to him and give him information, he pieced the puzzle together himself. He should not be penalized for that.

The problem is the vagueness of the law. Laws should not be left open for wide speculation and interpretation of said law. Especially in finance, it should be as defined in particular as possible. We definitely should have fair markets, without it Wall Street would evolve into an even more chaotic and corrupt place. The people need to know where they stand and what they can and cannot do.

This type of disparity in the law and its enforcement is not unique to the financial industry. Drug laws and penalties vary wildly. The Rockefeller drug laws are some of the most notoriously lopsided legislation that was ever passed. You could do decades for possession of crack but only a few years of probation for the equivalent amount of cocaine.

Define the laws, level the playing field and enforce penalties uniformly. It's really just a simple as that.

On a funny note the guys who used a Croatian seamstress at the front first tried to hire strippers to solicit tips from bankers while they were partying at a strip club. Illegal, yes but funny as hell.

The War on Insider Trading: Market-Beaters Beware

Related Stories