4 ms·

How hard is insider trading to catch, really? I'd assume a high level conversation between two executives over golf and bourbon is pretty damn hard to audit.

kleer001 10y ago
Yup. Cigars, Masons, Yacht clubs, Golf clubs, vacations to Ibiza. There's an endless list of rich only completely private locals. If people can just keep their damn mouths shut then it's all good. And I would suppose that there's an acceleration with wealth, right? Like a cosmological constant of wealth gap, reset in some places every once in a very rare.
- ethbro 10y ago
  Isn't the extreme upper end of a progressive tax code essentially an understanding that "look, if you're making this many multiples of everyone else's income, you're probably doing something illegal. So help fund the military / social welfare and we won't prosecute you"? Edit: I realized I didn't use the most accurate language. "... you're probably doing something unfair" would be a better characterization.
  - madelinecameron 10y ago
    It doesn't even have to do with making a lot of money. Everyone breaks laws every single day. It isn't a question of 'if', it is a question of 'when'. Did Bill Gates 'break the law' by essentially creating a monopoly? Technically yeah, but is that really a law anyone actually cares about?
    - seizethecheese 10y ago
      Creating a monopoly is not illegal, it's illegal to use monopoly power to damage opponents.
      - TheCoelacanth 10y ago
        > Creating a monopoly is not illegal No, read section 2 of the Sherman Act. > Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony The only legal form of monopoly is one that comes into existence without anyone intentionally creating it.
    - seizethecheese 10y ago
      Creating a monopoly is not illegal, it's illegal to use monopoly power to damage opponents.
  - ryanl0l 10y ago
    No, it isn't.
    - ethbro 10y ago
      If not, then what moral basis does a progressive tax code rest on? Or do you disagree with a progressive code?
      - amitdeshwar 10y ago
        Decreasing marginal utility of money plus "fairness" (everyone sacrificing an equal proportion of their utility). Fairness is in quotes because it's a complicated word.
        ethbro 10y ago
        Added an edit onto my original because I realized I was using illegal as a proxy for fair (given the context of the article and SEC/Wall Street prosecutions).
      - dizzy3gg 10y ago
        Agreed. But for Political Correctness remove ", you're probably doing something illegal" and thats is probably the moral basis.
        ethbro 10y ago
        I've never been much of one for Political Correctness as long as my statement doesn't actively make an oppressed group feel worse about themselves. I added an edit to clarify the correlation I was trying to draw.
      - tanker 10y ago
        I consider a progressive tax code to be justified by supporting the system which permits large gains. There is also an argument about holding onto large amounts of wealth being difficult without expending some of your resources to protect it. If nothing else, taxes spread the burden of the security apparatus around. If you have more to lose, you pay more to protect it.
  - whatok 10y ago
    Where are you getting this from?
  - zardo 10y ago
    I don't think that's the rationale behind the US tax code. The top bracket is less than $500k, and the real inherent unfairness in our system is that having money makes you more money. That's about wealth and Capitol gain, not income.
cloudjacker 10y ago
It's pretty hard One hacker group was trading ephemeral insider trading tips on snapchat. They got busted because some old fart had an email of a screenshot of the tip. "I don't get snapchat" use your imagination
zekevermillion 10y ago
I'm sure the vast majority goes unpunished. But they do make an effort. It is relatively easy to find suspicious trades using statistical methods. Once the regulators decide to pursue a particular trade or event, they are quite exhaustive in establishing ties between insiders and the suspicious trading activity. For example, as a young lawyer, I played a small part on an M&A deal where there was suspicious trading by some UK-based hedge funds. All the lawyers, bankers, and principals on the deal received a letter from the SEC asking for a list of every person who may have had knowledge of the deal, what they knew, and when they first knew it. That went as far as listing secretaries who were physically stationed near our office, whether or not they worked on the transaction. Nothing came of that investigation, which as far as I know may be the usual result. There are certainly stories where the SEC or DOJ have managed to establish amazingly tenuous connections between tippers and tippees. Presumably the badguy will not just volunteer "hey I give stock tips to my college buddy". But I think if the suspicion is high enough, the regulators can be quite systematic in tracking down leads.

kleer001 10y ago

Yup. Cigars, Masons, Yacht clubs, Golf clubs, vacations to Ibiza. There's an endless list of rich only completely private locals. If people can just keep their damn mouths shut then it's all good. And I would suppose that there's an acceleration with wealth, right? Like a cosmological constant of wealth gap, reset in some places every once in a very rare.

ethbro 10y ago
Isn't the extreme upper end of a progressive tax code essentially an understanding that "look, if you're making this many multiples of everyone else's income, you're probably doing something illegal. So help fund the military / social welfare and we won't prosecute you"? Edit: I realized I didn't use the most accurate language. "... you're probably doing something unfair" would be a better characterization.
- madelinecameron 10y ago
  It doesn't even have to do with making a lot of money. Everyone breaks laws every single day. It isn't a question of 'if', it is a question of 'when'. Did Bill Gates 'break the law' by essentially creating a monopoly? Technically yeah, but is that really a law anyone actually cares about?
  - seizethecheese 10y ago
    Creating a monopoly is not illegal, it's illegal to use monopoly power to damage opponents.
    - TheCoelacanth 10y ago
      > Creating a monopoly is not illegal No, read section 2 of the Sherman Act. > Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony The only legal form of monopoly is one that comes into existence without anyone intentionally creating it.
  - seizethecheese 10y ago
    Creating a monopoly is not illegal, it's illegal to use monopoly power to damage opponents.
- ryanl0l 10y ago
  No, it isn't.
  - ethbro 10y ago
    If not, then what moral basis does a progressive tax code rest on? Or do you disagree with a progressive code?
    - amitdeshwar 10y ago
      Decreasing marginal utility of money plus "fairness" (everyone sacrificing an equal proportion of their utility). Fairness is in quotes because it's a complicated word.
      - ethbro 10y ago
        Added an edit onto my original because I realized I was using illegal as a proxy for fair (given the context of the article and SEC/Wall Street prosecutions).
    - dizzy3gg 10y ago
      Agreed. But for Political Correctness remove ", you're probably doing something illegal" and thats is probably the moral basis.
      - ethbro 10y ago
        I've never been much of one for Political Correctness as long as my statement doesn't actively make an oppressed group feel worse about themselves. I added an edit to clarify the correlation I was trying to draw.
    - tanker 10y ago
      I consider a progressive tax code to be justified by supporting the system which permits large gains. There is also an argument about holding onto large amounts of wealth being difficult without expending some of your resources to protect it. If nothing else, taxes spread the burden of the security apparatus around. If you have more to lose, you pay more to protect it.
- whatok 10y ago
  Where are you getting this from?
- zardo 10y ago
  I don't think that's the rationale behind the US tax code. The top bracket is less than $500k, and the real inherent unfairness in our system is that having money makes you more money. That's about wealth and Capitol gain, not income.

cloudjacker 10y ago

It's pretty hard One hacker group was trading ephemeral insider trading tips on snapchat. They got busted because some old fart had an email of a screenshot of the tip. "I don't get snapchat" use your imagination

zekevermillion 10y ago

I'm sure the vast majority goes unpunished. But they do make an effort. It is relatively easy to find suspicious trades using statistical methods. Once the regulators decide to pursue a particular trade or event, they are quite exhaustive in establishing ties between insiders and the suspicious trading activity. For example, as a young lawyer, I played a small part on an M&A deal where there was suspicious trading by some UK-based hedge funds. All the lawyers, bankers, and principals on the deal received a letter from the SEC asking for a list of every person who may have had knowledge of the deal, what they knew, and when they first knew it. That went as far as listing secretaries who were physically stationed near our office, whether or not they worked on the transaction. Nothing came of that investigation, which as far as I know may be the usual result. There are certainly stories where the SEC or DOJ have managed to establish amazingly tenuous connections between tippers and tippees. Presumably the badguy will not just volunteer "hey I give stock tips to my college buddy". But I think if the suspicion is high enough, the regulators can be quite systematic in tracking down leads.