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Most important tidbit in there is actually nothing to do with Amazon HQ2 but rather his recapitulation of a subtlety of insider trading which most people do not

Most important tidbit in there is actually nothing to do with Amazon HQ2 but rather his recapitulation of a subtlety of insider trading which most people do not realize or necessarily share his perspective on: >Insider trading, I often say, is not about fairness; it’s about theft. There is no general prohibition on the use of material nonpublic information in stock trading, and in fact investors are supposed to find out new facts, and trade on them, so that prices can be more informative. Insider trading law is really about the misappropriation of nonpublic information that belongs to someone else — a corporate CEO using information that belongs to shareholders, or a therapist using information that belongs to her client — rather than the “level playing field” that prosecutors love to talk about.

matt4077 8y ago
I think Matt Levine is rather excellent, a model for the sort of dialectic reasoning that's sorely missing. Yet I just don't get this argument of his. As far as I can tell, insider trading prohibitions are intended to protect the integrity of the market. That's why they are administered by the SEC. If you steal office supply, the SEC doesn't get involved. If you steal trade secrets to build an exact replica of <widget>, the SEC also has nothing to do with it. "Integrity of the market" in this case means that every investor can at least somewhat accurately estimate where they stand in the competition with other investors. That doesn't mean it's a completely level playing field; Large funds with the resources to send employees to every walmart and count the cars in the parking lot will always have an advantage. And that's not a bug but a feature, since it's the mechanism by which investors are rewarded for uncovering information. But those are what one might call "known unknowns". What could easily destroy the market are "unknown unknowns, the Deus Ex Machina taking all your money, with not even the theoretical chance to compete without leveraging insider information yourself. As an analogy, it's like a usual casino, where you know your expected value is slightly negative. And one where, with no predictability, the staff sometimes just takes all your chips and kicks you out. All that appears to me rather close to the concept of "fairness". Not for any moral considerations, but simply to avoid the inevitable death of an "unfair" market. (There's a fair (stolen?) chance that Matt Levine is right and I'm wrong. If you are looking for investment or legal advice, he is far more capable than me.) (I also think this very case somewhat supports the view above: Surely buying real estate ahead of the market is an opportunity that Amazon itself could have used profitably. Thus, it would appear to fit the definition of "theft of information that belongs to the company")

matt4077 8y ago

I think Matt Levine is rather excellent, a model for the sort of dialectic reasoning that's sorely missing. Yet I just don't get this argument of his. As far as I can tell, insider trading prohibitions are intended to protect the integrity of the market. That's why they are administered by the SEC. If you steal office supply, the SEC doesn't get involved. If you steal trade secrets to build an exact replica of <widget>, the SEC also has nothing to do with it. "Integrity of the market" in this case means that every investor can at least somewhat accurately estimate where they stand in the competition with other investors. That doesn't mean it's a completely level playing field; Large funds with the resources to send employees to every walmart and count the cars in the parking lot will always have an advantage. And that's not a bug but a feature, since it's the mechanism by which investors are rewarded for uncovering information. But those are what one might call "known unknowns". What could easily destroy the market are "unknown unknowns, the Deus Ex Machina taking all your money, with not even the theoretical chance to compete without leveraging insider information yourself. As an analogy, it's like a usual casino, where you know your expected value is slightly negative. And one where, with no predictability, the staff sometimes just takes all your chips and kicks you out. All that appears to me rather close to the concept of "fairness". Not for any moral considerations, but simply to avoid the inevitable death of an "unfair" market. (There's a fair (stolen?) chance that Matt Levine is right and I'm wrong. If you are looking for investment or legal advice, he is far more capable than me.) (I also think this very case somewhat supports the view above: Surely buying real estate ahead of the market is an opportunity that Amazon itself could have used profitably. Thus, it would appear to fit the definition of "theft of information that belongs to the company")