8 ms·

Regulators of Facebook, Google and Amazon also invest in the companies’ stocks

247 points by thm 4y ago

mikece 4y ago
Wouldn't this be a pretty cut-and-dry case of insider trading (or do regulators have an exemption to insider trading rules like members of congress have?)?
- volfied 4y ago
  People that can officially call it insider trading are the ones doing it.
  - mikece 4y ago
    There have been bills introduced to ban members of Congress from insider trading but, amazingly, they keep getting shot down in committee.
    - JumpCrisscross 4y ago
      > have been bills introduced to ban members of Congress from insider trading but, amazingly, they keep getting shot down in committee This is incorrect. The STOCK Act banned insider trading by members of Congress in 2012 [1]. Disclosure requirements for staffers were amended in 2013 [2], but prohibitions on Congressmen remain in force [3]. [1] https://en.wikipedia.org/wiki/STOCK_Act https://en.wikipedia.org/wiki/STOCK_Act [2] https://en.wikipedia.org/wiki/STOCK_Act#Amendment https://en.wikipedia.org/wiki/STOCK_Act#Amendment [3] https://en.wikipedia.org/wiki/2020_congressional_insider_trading_scandal https://en.wikipedia.org/wiki/2020_congressional_insider_tra...
      - lcampbell 4y ago
        > but prohibitions on Congressmen remain in force [i.e. 2020 congressional insider trading] Is it really "in force" when, despite much ado, no charges were brought in the linked scandal [1][2]? I don't really have a horse in this race, I just took issue with the particular example you referenced. [1] https://www.nytimes.com/2020/05/26/us/politics/senators-stock-trades-investigation.html https://www.nytimes.com/2020/05/26/us/politics/senators-stoc... [2] https://www.cnbc.com/2021/01/19/doj-will-not-charge-sen-richard-burr-for-covid-stock-trades.html https://www.cnbc.com/2021/01/19/doj-will-not-charge-sen-rich...
        JumpCrisscross 4y ago
        > when, despite much ado, no charges were brought in the linked scandal A Senator’s phone was subpoenaed by the FBI. That’s substantial. (The allegation was Burr had insider information on broad market movements. Absent direct evidence he misappropriated privileged information, that’s a tough charge to bring. Had he bought e.g. Moderna shares, prosecutors may have had a case.) The whole thing, moreover, came to light because of the STOCK Act. There are now calls for bans on individual stock trading by Congressmen as a result of the evidence from these scandals. I’m not defending the status quo. But it’s definitely improving and not a free for all.
- BurningFrog 4y ago
  It's maybe how cops are exempt from speeding tickets etc.
MichaelCollins 4y ago
So do legislators. Is it any wonder the American government seemingly lets these companies get away with anything? What did Bill Gates learn after the Microsoft antitrust case? Don't snub Washington: https://www.cnbc.com/2020/10/14/bill-gates-i-was-naive-at-microsoft-on-antitrust-scrutiny.html https://www.cnbc.com/2020/10/14/bill-gates-i-was-naive-at-mi... > "I was naive at Microsoft and didn't realize that our success would lead to government attention," Gates said, referring to Microsoft's antitrust challenges from more than 20 years ago. "And so I made some mistakes — you know, just saying, 'Hey, I never go to Washington, D.C.' And now I don't think, you know, that naivete is there." https://money.cnn.com/magazines/fortune/fortune_archive/2002/04/29/321995/index.htm https://money.cnn.com/magazines/fortune/fortune_archive/2002... > For a couple of embarrassing years in the mid-'90s, Microsoft's primary lobbying presence in D.C. was "Jack and his Jeep." As the software giant's sole in-house lobbyist, Jack Krumholtz, then 33, had to battle endless traffic jams to get from Microsoft's suburban sales office to Capitol Hill. "Early on I spent most of the day in my Jeep Grand Cherokee on my cellphone," Krumholtz says. "I hit an all-time low on the day I was parked on a Capitol Hill side street reading through my mail with the laptop on the steering wheel." > No longer. After the Justice Department filed its antitrust suit in 1998, Microsoft--a company famous for its disdain of government--undertook the largest government affairs makeover in corporate history. The company now boasts one of the most dominating, multifaceted, and sophisticated influence machines around, one that spends tens of millions a year. It's no great surprise that one of the country's wealthiest companies can bankroll a beefed-up lobbying operation when it faces a crisis. But what few people realize is that Microsoft has reached the very highest ranks of lobbying so quickly. Says David Hart, a lobbying expert at Harvard's Kennedy School of Government: "Microsoft has joined the top tier"--with such longtime heavyweights as Philip Morris, Lockheed Martin, and AT&T.
- systemvoltage 4y ago
  > So do legislators. Yea but there is a decent amount of awareness around it. Regulators, not so much.
  - metadat 4y ago
    Not really, I was clueless to the scale of the securities abuse our congressman engage in until seeing the UnusualWhales twitter account. It's a club.. and we're not in it.
malshe 4y ago
Free link: https://www.wsj.com/articles/the-regulators-of-facebook-google-and-amazon-also-invest-in-the-companies-stocks-11665670207?st=zcb4et2uk5azeqw&reflink=desktopwebshare_permalink https://www.wsj.com/articles/the-regulators-of-facebook-goog...
PragmaticPulp 4y ago
> An investment of $15,000 or less in an individual stock, or of $50,000 or less in an industry-specific mutual fund, isn’t deemed a conflict of interest under federal regulations. > An FTC spokesman said the agency officials had followed the law. While I don't really want to see regulators owning any amount of individual stocks in companies they're directly regulating, the $15,000 individual stock limit limits the impact quite a bit. Even if someone did own $15,000 of an individual stock, the personal financial gain/loss of even major regulatory actions isn't a huge amount. Also keep in mind that you can't buy basically any large cap mutual fund without owning significant amounts of Facebook, Google, Amazon, Apple, and other large companies.
- lostmsu 4y ago
  What about derivatives?
  - compsciphd 4y ago
    at Bloomberg, even thought I didn't work on any financial product (I worked on their law product), I wasn't allowed to own any derivatives per my contract.
- junofan 4y ago
  Isn’t the correct comparison other ethics rules around conflicts of interest/gifting/etc for government officials? Upside on $15k through each merger transaction seems way out of line.
  - dnissley 4y ago
    What large bumps due to merges/acqs are you referring to?
- MichaelCollins 4y ago
  Even a hundred dollars is enough to make people feel an irrational protective attachment to the company. Shit, even buying a company's product has been known to make people treat that company like part of their tribe. Insult Apple in another thread if you want to see a demonstration of this. Or insult the Harley Davidson company at a biker bar.
levesque 4y ago
Isn't everyone investing in FAANG etc. at this point? Like if you have a retirement fund you own these stocks almost guaranteed. Probably beyond the 50K industry specific limits mentioned elsewhere in here too
- bin_bash 4y ago
  If that's all it was this wouldn't be a story. This is specifically talking about individual stocks. > Nearly one in four top FTC officials owned or traded individual stocks of tech companies such as Amazon.com Inc., Meta Platforms Inc.’s Facebook, Alphabet Inc.’s Google, Microsoft Corp. and Oracle Corp.
  - deleted 4y ago
    [deleted]
- madeofpalk 4y ago
  The Verge prevents its employees from owning or trading individual tech stocks, but permits general (retirement) funds https://www.theverge.com/ethics-statement https://www.theverge.com/ethics-statement
theptip 4y ago
I can just about see a case for letting FTC officials hold industry-specific funds long, along the same lines as giving employees stock grants; in some sense you might want the regulators to want the broader industry to be successful. Even this is questionable though; are we currently erring in having regulators be too business-hostile? Unclear. But allowing regulators to trade individual stocks that they regulate is unacceptable, at any dollar value. There is just no way to avoid conflicts of interest. If this rule means you can’t hire good people, the salary needs to increase.
lacoolj 4y ago
so? if they aren't regulating properly they have oversight to remove them. what they invest in with their own money is their business.
- DesiLurker 4y ago
  You can possibly be serious about that remark. This is the definition of conflict of interest. they are much less likely to make decisions that would make their own investments go down. this is why regulator are supposed to put their money in a blind trust. Also, what makes you think their oversight would not be invested like them and not have the same conflict of interest as them?
neonate 4y ago
https://archive.ph/tv7Xm https://archive.ph/tv7Xm
schainks 4y ago
My tax dollars should pay for these companies to be regulated in the interests of the people, not the interests of the people that are regulators. The fewer opportunities for conflict of interest, the better the outcomes in the general case.
1vuio0pswjnm7 4y ago
https://www.wsj.com/articles/how-wsj-analyzed-12-000-federal-officials-financial-disclosures-for-its-capital-assets-investigation-11665491120 https://www.wsj.com/articles/how-wsj-analyzed-12-000-federal... WSJ should publish this database, i.e., the data and disclose the software used. This is not a database of leaked information. It is all publicly available. Instead, WSJ tells readers all about how they constructed it, like some sort of teaser. This reminds me of computer science papers that describe software the authors wrote but refuse to release. How can the reader be certain the software did not contain errors that affected the results. There are some who believe researchers who publish findings about some object of study for the benefit of the public, e.g., an academic community or a newspaper readership, are "obligated" to supply the resources they used to other researchers so others can replicate or conduct further studies.
Mountain_Skies 4y ago
When I worked at a law firm, all of my market trades of individual stocks had to go through clearance, regardless of size, even though I never had access to privileged information. Never had a trade anywhere near $15,000 in value but everything still had to go through clearance first. I was never denied a trade but one of my co-workers had a couple of his trades delayed a few weeks.
denkmoon 4y ago
Seems to me someone who is supposed to be regulating a given activity should a) not be participating in the activity and b) should be compensated for the opportunity cost of not participating. That limit seems pointless at achieving its goal of minimising conflicting interests.
- deleted 4y ago
  [deleted]

247 points by thm 4y ago

Wouldn't this be a pretty cut-and-dry case of insider trading (or do regulators have an exemption to insider trading rules like members of congress have?)?

volfied 4y ago
People that can officially call it insider trading are the ones doing it.
- mikece 4y ago
  There have been bills introduced to ban members of Congress from insider trading but, amazingly, they keep getting shot down in committee.
  - JumpCrisscross 4y ago
    > have been bills introduced to ban members of Congress from insider trading but, amazingly, they keep getting shot down in committee This is incorrect. The STOCK Act banned insider trading by members of Congress in 2012 [1]. Disclosure requirements for staffers were amended in 2013 [2], but prohibitions on Congressmen remain in force [3]. [1] https://en.wikipedia.org/wiki/STOCK_Act https://en.wikipedia.org/wiki/STOCK_Act [2] https://en.wikipedia.org/wiki/STOCK_Act#Amendment https://en.wikipedia.org/wiki/STOCK_Act#Amendment [3] https://en.wikipedia.org/wiki/2020_congressional_insider_trading_scandal https://en.wikipedia.org/wiki/2020_congressional_insider_tra...
    - lcampbell 4y ago
      > but prohibitions on Congressmen remain in force [i.e. 2020 congressional insider trading] Is it really "in force" when, despite much ado, no charges were brought in the linked scandal [1][2]? I don't really have a horse in this race, I just took issue with the particular example you referenced. [1] https://www.nytimes.com/2020/05/26/us/politics/senators-stock-trades-investigation.html https://www.nytimes.com/2020/05/26/us/politics/senators-stoc... [2] https://www.cnbc.com/2021/01/19/doj-will-not-charge-sen-richard-burr-for-covid-stock-trades.html https://www.cnbc.com/2021/01/19/doj-will-not-charge-sen-rich...
      - JumpCrisscross 4y ago
        > when, despite much ado, no charges were brought in the linked scandal A Senator’s phone was subpoenaed by the FBI. That’s substantial. (The allegation was Burr had insider information on broad market movements. Absent direct evidence he misappropriated privileged information, that’s a tough charge to bring. Had he bought e.g. Moderna shares, prosecutors may have had a case.) The whole thing, moreover, came to light because of the STOCK Act. There are now calls for bans on individual stock trading by Congressmen as a result of the evidence from these scandals. I’m not defending the status quo. But it’s definitely improving and not a free for all.
BurningFrog 4y ago
It's maybe how cops are exempt from speeding tickets etc.

MichaelCollins 4y ago

So do legislators. Is it any wonder the American government seemingly lets these companies get away with anything? What did Bill Gates learn after the Microsoft antitrust case? Don't snub Washington: https://www.cnbc.com/2020/10/14/bill-gates-i-was-naive-at-microsoft-on-antitrust-scrutiny.html https://www.cnbc.com/2020/10/14/bill-gates-i-was-naive-at-mi... > "I was naive at Microsoft and didn't realize that our success would lead to government attention," Gates said, referring to Microsoft's antitrust challenges from more than 20 years ago. "And so I made some mistakes — you know, just saying, 'Hey, I never go to Washington, D.C.' And now I don't think, you know, that naivete is there." https://money.cnn.com/magazines/fortune/fortune_archive/2002/04/29/321995/index.htm https://money.cnn.com/magazines/fortune/fortune_archive/2002... > For a couple of embarrassing years in the mid-'90s, Microsoft's primary lobbying presence in D.C. was "Jack and his Jeep." As the software giant's sole in-house lobbyist, Jack Krumholtz, then 33, had to battle endless traffic jams to get from Microsoft's suburban sales office to Capitol Hill. "Early on I spent most of the day in my Jeep Grand Cherokee on my cellphone," Krumholtz says. "I hit an all-time low on the day I was parked on a Capitol Hill side street reading through my mail with the laptop on the steering wheel." > No longer. After the Justice Department filed its antitrust suit in 1998, Microsoft--a company famous for its disdain of government--undertook the largest government affairs makeover in corporate history. The company now boasts one of the most dominating, multifaceted, and sophisticated influence machines around, one that spends tens of millions a year. It's no great surprise that one of the country's wealthiest companies can bankroll a beefed-up lobbying operation when it faces a crisis. But what few people realize is that Microsoft has reached the very highest ranks of lobbying so quickly. Says David Hart, a lobbying expert at Harvard's Kennedy School of Government: "Microsoft has joined the top tier"--with such longtime heavyweights as Philip Morris, Lockheed Martin, and AT&T.

systemvoltage 4y ago
> So do legislators. Yea but there is a decent amount of awareness around it. Regulators, not so much.
- metadat 4y ago
  Not really, I was clueless to the scale of the securities abuse our congressman engage in until seeing the UnusualWhales twitter account. It's a club.. and we're not in it.

malshe 4y ago

Free link: https://www.wsj.com/articles/the-regulators-of-facebook-google-and-amazon-also-invest-in-the-companies-stocks-11665670207?st=zcb4et2uk5azeqw&reflink=desktopwebshare_permalink https://www.wsj.com/articles/the-regulators-of-facebook-goog...

PragmaticPulp 4y ago

> An investment of $15,000 or less in an individual stock, or of $50,000 or less in an industry-specific mutual fund, isn’t deemed a conflict of interest under federal regulations. > An FTC spokesman said the agency officials had followed the law. While I don't really want to see regulators owning any amount of individual stocks in companies they're directly regulating, the $15,000 individual stock limit limits the impact quite a bit. Even if someone did own $15,000 of an individual stock, the personal financial gain/loss of even major regulatory actions isn't a huge amount. Also keep in mind that you can't buy basically any large cap mutual fund without owning significant amounts of Facebook, Google, Amazon, Apple, and other large companies.

lostmsu 4y ago
What about derivatives?
- compsciphd 4y ago
  at Bloomberg, even thought I didn't work on any financial product (I worked on their law product), I wasn't allowed to own any derivatives per my contract.
junofan 4y ago
Isn’t the correct comparison other ethics rules around conflicts of interest/gifting/etc for government officials? Upside on $15k through each merger transaction seems way out of line.
- dnissley 4y ago
  What large bumps due to merges/acqs are you referring to?
MichaelCollins 4y ago
Even a hundred dollars is enough to make people feel an irrational protective attachment to the company. Shit, even buying a company's product has been known to make people treat that company like part of their tribe. Insult Apple in another thread if you want to see a demonstration of this. Or insult the Harley Davidson company at a biker bar.

levesque 4y ago

Isn't everyone investing in FAANG etc. at this point? Like if you have a retirement fund you own these stocks almost guaranteed. Probably beyond the 50K industry specific limits mentioned elsewhere in here too

bin_bash 4y ago
If that's all it was this wouldn't be a story. This is specifically talking about individual stocks. > Nearly one in four top FTC officials owned or traded individual stocks of tech companies such as Amazon.com Inc., Meta Platforms Inc.’s Facebook, Alphabet Inc.’s Google, Microsoft Corp. and Oracle Corp.
- deleted 4y ago
  [deleted]
madeofpalk 4y ago
The Verge prevents its employees from owning or trading individual tech stocks, but permits general (retirement) funds https://www.theverge.com/ethics-statement https://www.theverge.com/ethics-statement

theptip 4y ago

I can just about see a case for letting FTC officials hold industry-specific funds long, along the same lines as giving employees stock grants; in some sense you might want the regulators to want the broader industry to be successful. Even this is questionable though; are we currently erring in having regulators be too business-hostile? Unclear. But allowing regulators to trade individual stocks that they regulate is unacceptable, at any dollar value. There is just no way to avoid conflicts of interest. If this rule means you can’t hire good people, the salary needs to increase.

lacoolj 4y ago

so? if they aren't regulating properly they have oversight to remove them. what they invest in with their own money is their business.

DesiLurker 4y ago
You can possibly be serious about that remark. This is the definition of conflict of interest. they are much less likely to make decisions that would make their own investments go down. this is why regulator are supposed to put their money in a blind trust. Also, what makes you think their oversight would not be invested like them and not have the same conflict of interest as them?

neonate 4y ago

https://archive.ph/tv7Xm https://archive.ph/tv7Xm

schainks 4y ago

My tax dollars should pay for these companies to be regulated in the interests of the people, not the interests of the people that are regulators. The fewer opportunities for conflict of interest, the better the outcomes in the general case.

1vuio0pswjnm7 4y ago

https://www.wsj.com/articles/how-wsj-analyzed-12-000-federal-officials-financial-disclosures-for-its-capital-assets-investigation-11665491120 https://www.wsj.com/articles/how-wsj-analyzed-12-000-federal... WSJ should publish this database, i.e., the data and disclose the software used. This is not a database of leaked information. It is all publicly available. Instead, WSJ tells readers all about how they constructed it, like some sort of teaser. This reminds me of computer science papers that describe software the authors wrote but refuse to release. How can the reader be certain the software did not contain errors that affected the results. There are some who believe researchers who publish findings about some object of study for the benefit of the public, e.g., an academic community or a newspaper readership, are "obligated" to supply the resources they used to other researchers so others can replicate or conduct further studies.

Mountain_Skies 4y ago

When I worked at a law firm, all of my market trades of individual stocks had to go through clearance, regardless of size, even though I never had access to privileged information. Never had a trade anywhere near $15,000 in value but everything still had to go through clearance first. I was never denied a trade but one of my co-workers had a couple of his trades delayed a few weeks.

denkmoon 4y ago

Seems to me someone who is supposed to be regulating a given activity should a) not be participating in the activity and b) should be compensated for the opportunity cost of not participating. That limit seems pointless at achieving its goal of minimising conflicting interests.

deleted 4y ago
[deleted]