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U.S. Pursues Sweeping Insider-Trading Probe

22 points by ph0rque 16y ago

kiba 16y ago
Inside trading is a good thing. It bubble up information to the surface.
- mkramlich 16y ago
  So does theft. ;)
mkramlich 16y ago
Having "insider trading" be illegal always seemed a bit comical to me. Not because I necessarily think it is not unethical (I see arguments both for and against it) but because in a world where people are allowed to meet together and communicate, freely, with privacy, in "secrecy" and nothing recorded, then, well, I think it's inevitable that it's going to happen. Person A knows X. Person B can profit if he were to learn X. Somehow, person A's knowledge gets to B, either directly or through some middle-man. B profits. Person A gets some sort of renumeration, perhaps directly, perhaps more indirectly. It is so easy to setup whatever indirect chain of communication or renumeration you desire in order to achieve "secrecy" and/or legality and/or plausible deniability. Not to say that I've done it. But I have done it as a thought experiment to figure out how it could work. And there's plenty of circumstantial evidence that others are doing it for real. Reminds me of how prostitution is illegal (in most places) in the US. But only if done in the most literal and narrowly-proscribed and blatant of ways. But if it's in a little more indirect or creative way, suddenly that's legal.
rajat 16y ago
2 points about this leaped out at me: Firstly: "Sweeping insider trading probe" that involves "multiple insider-trading rings" which "reaped illegal profits totaling tens of millions of dollars..." That's it? Sweeping obviously does not apply to the actual trades since tens of millions of dollars involves a couple of seconds of trades. Given the size of our securities markets, this is not even peanuts in scale. "Pervasive insider trading networks" would have to involve at least a significant percentage of a billion dollars, if not multiple billion dollars. I'm not arguing about the illegality or the ethics of this; just the characterization of this being so incredibly important. Secondly: When discussing whether insider trading should be illegal or not, keep in mind that the U.S. Congress has thoughtfully exempted themselves from insider trading rules. Ethics, like taxes, is only for the little people.
sireat 16y ago
It seems US is trying to make application of http://en.wikipedia.org/wiki/Mosaic_theory http://en.wikipedia.org/wiki/Mosaic_theory illegal, which would be incredibly silly. There always has to be some information on a company, which will not be available to general public. In my book there are two typos of insider trading: One, where Bud Fox tailgates Sir Larry Wildman and thus allows Gekko to put the pieces together as to which the next takeover target will be. (lets set aside the fact that Gekko had bribed someone on Wildman's payroll) Assuming the information was gathered using public means, this type of trading should be legal. Second type,where Bud Fox gathers information from various offices with his cleaning crew obviously should be illegal, perhaps not because of the trading that follows, but just because it is breaking and entering in effect. Another point could be made that insider trading being made illegal obscures transparency in the markets. If company principals were allowed to trade in a shorter time-frame but with full disclosure, markets could absorb the information better.

22 points by ph0rque 16y ago

kiba 16y ago

Inside trading is a good thing. It bubble up information to the surface.

mkramlich 16y ago
So does theft. ;)

mkramlich 16y ago

Having "insider trading" be illegal always seemed a bit comical to me. Not because I necessarily think it is not unethical (I see arguments both for and against it) but because in a world where people are allowed to meet together and communicate, freely, with privacy, in "secrecy" and nothing recorded, then, well, I think it's inevitable that it's going to happen. Person A knows X. Person B can profit if he were to learn X. Somehow, person A's knowledge gets to B, either directly or through some middle-man. B profits. Person A gets some sort of renumeration, perhaps directly, perhaps more indirectly. It is so easy to setup whatever indirect chain of communication or renumeration you desire in order to achieve "secrecy" and/or legality and/or plausible deniability. Not to say that I've done it. But I have done it as a thought experiment to figure out how it could work. And there's plenty of circumstantial evidence that others are doing it for real. Reminds me of how prostitution is illegal (in most places) in the US. But only if done in the most literal and narrowly-proscribed and blatant of ways. But if it's in a little more indirect or creative way, suddenly that's legal.

rajat 16y ago

2 points about this leaped out at me: Firstly: "Sweeping insider trading probe" that involves "multiple insider-trading rings" which "reaped illegal profits totaling tens of millions of dollars..." That's it? Sweeping obviously does not apply to the actual trades since tens of millions of dollars involves a couple of seconds of trades. Given the size of our securities markets, this is not even peanuts in scale. "Pervasive insider trading networks" would have to involve at least a significant percentage of a billion dollars, if not multiple billion dollars. I'm not arguing about the illegality or the ethics of this; just the characterization of this being so incredibly important. Secondly: When discussing whether insider trading should be illegal or not, keep in mind that the U.S. Congress has thoughtfully exempted themselves from insider trading rules. Ethics, like taxes, is only for the little people.

sireat 16y ago

It seems US is trying to make application of http://en.wikipedia.org/wiki/Mosaic_theory http://en.wikipedia.org/wiki/Mosaic_theory illegal, which would be incredibly silly. There always has to be some information on a company, which will not be available to general public. In my book there are two typos of insider trading: One, where Bud Fox tailgates Sir Larry Wildman and thus allows Gekko to put the pieces together as to which the next takeover target will be. (lets set aside the fact that Gekko had bribed someone on Wildman's payroll) Assuming the information was gathered using public means, this type of trading should be legal. Second type,where Bud Fox gathers information from various offices with his cleaning crew obviously should be illegal, perhaps not because of the trading that follows, but just because it is breaking and entering in effect. Another point could be made that insider trading being made illegal obscures transparency in the markets. If company principals were allowed to trade in a shorter time-frame but with full disclosure, markets could absorb the information better.