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> 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

> 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.
- JamesianP 4y ago
  Making rules that avoid triggering irrational behavior is rather hopeless by definition though. For all we know a regulator once dated someone who worked at a company and the bad breakup makes them spiteful against the whole organization. The solution there has to be oversight to identify when a regulator is misbehaving. Though I'm fine with limiting their ownership to zero for purely rational reasons. A few thousand bucks worth of loss/gain might still sway small borderline decisions.
  - MichaelCollins 4y ago
    I don't seriously propose that regulators looking at Apple should be forbidden from owning Apple devices; that's too impractical even though it would otherwise be a good idea. For practical reasons I'd give a pass to indirect investment through mutual funds/etc too. But forbidden them from buying any amount of AAPL directly? I think that's very reasonable.
    - JumpCrisscross 4y ago
      > forbidden them from buying any amount of AAPL directly? Once the investigation starts, absolutely. But forcing a regulator to sell their $10k stake in Apple prior to investigating them creates its own weird incentives.
      - iudqnolq 4y ago
        "You must do something with personal financial consequences if you want to start investigating Apple" isn't a workable improvement.
    - JamesianP 4y ago
      yes I was referring to stock ownership too, and only rational behavior. A phone probably won't change measurably in value from a regulatory decision, but $15k of stock certainly could.
    - yibberish 4y ago
calibas 4y ago
What if the stock is owned by a spouse?
francisofascii 4y ago
> Nearly one in four top FTC officials owned or traded individual stocks of tech companies While I agree a broad based fund will have allocations of these stocks and should be okay for them to own, but what are they doing owning individual stocks?
- seanmcdirmid 4y ago
  Micro managing their portfolios? I can also imagine a lot of them getting in on IPOs or later offerings before becoming FTC officials and not clearing those stocks out of their portfolio. But $15k...isn't a lot.
  - alistairSH 4y ago
    $15k is ~1 months salary for a senior bureaucrat (GS scale) in DC metro. How many months income does it take to corrupt somebody? $15k into each FAANG is $75k, double the national median income. It all adds up a sizable potential conflict. This is roughly the same debate as Congress, just on a smaller scale. What is the balance between reasonable individual financial management and ensuring conflicts don't exist?
    - seanmcdirmid 4y ago
      > $15k is ~1 months salary for a senior bureaucrat (GS scale) in DC metro. That isn't income, profit, or gains, but just the actual amount of stock they can hold/trade at some time. Let's say they had inside information, $15k doesn't allow for much leverage to take advantage of that information. > How many months income does it take to corrupt somebody? Probably a heck of a lot more than you could earn on trading just $15k of stock.
      - alistairSH 4y ago
        Yeah, I suppose the real question is how active is their trading? And are systems in place to catch them if they do appear to trade on insider info? This is one of those situations where the possibility/impression of special access to gains is probably worse than any actual gains being made. And it's certainly a much smaller scale than what we saw with Congress ($10s of millions in some cases).
deleted 4y ago
[deleted]
varelse 4y ago
WheatMillington 4y ago
Sometimes I feel like I live on a different planet to the people on HN. I don't own $15k of ANY single stock. In fact I don't have significant savings outside of retirement savings (which I deliberately don't manage) of that magnitude. If I had $15k of any given stock, I'd have an extreme personal interest in the performance of that stock IDK, maybe it's that I don't work in tech and I'm too young or too old or whatever (37, 2 kids) but it just seems crazy to me to think that for some people $15k in any SINGLE stock isn't a meaningful amount of money.
- grog454 4y ago
  The point is: would you be willing to risk massive fines and jail time for making unethical decisions to try to turn your $15k into $30k if you did? Probably not. But if you could move your entire life savings into a stock the incentive for shady stuff increases significantly.
  - WheatMillington 4y ago
    What are you talking about? There is no risk, the point is they're perfectly allowed to hold $15k in these stocks.
    - JumpCrisscross 4y ago
      > the point is they're perfectly allowed to hold $15k in these stocks They're not allowed to insider trade on it, or corruptly modify their regulatory duties on account of it, irrespective of whether is $1 or ten thousand.
    - ip26 4y ago
      The risk is doing something illegal or unethical to increase the value of their holdings. The larger their holdings, the larger the incentive to do that illegal or unethical thing.
- Gh0stRAT 4y ago
  There are people on HN working for the big tech companies who are being granted that $15k worth of stock every month. ($180k/year) At the more senior levels and/or with some stock appreciation, it's not unheard-of for >50% of compensation to be in the form of RSUs. Obviously they should sell-on-vest and diversify into index funds, but a lot of them choose to buy and hold some individual stocks that they're bullish on as well.
deleted 4y ago
[deleted]
modriano 4y ago
Is that limit on the cost basis of the position or would the conflicted regulator have to sell off some stock if their position exceeded the $15k threshold?
cma 4y ago
If they held $15,000 in Facebook, Google, Amazon, Apple, MS, Nvidia, AMD, Intel, Qualcomm, TSMC, that's $150,000, and often these companies are doing extensive intermixed deals with each other with exclusivity agreements and other similar stuff.
bern4444 4y ago
To further this, if you have 200k of VTI/VTSAX or of a non vanguard alternative, that's $15,000 of Apple stock alone. It's about 6% of VTI currently which will hold true of any broad based market fund. If you own a tech sector fund like VGT, Apple makes up 22% of the fund. So having 200k of VGT is going to be just shy of $50,000 worth of apple stock.
kyleblarson 4y ago
Do they specify that that 15k is in the underlying equity itself? If not, it is incredibly easy to use options to leverage the hell out of that $14,999.
quadcore 4y ago
Even if someone did own $15,000 of an individual stock, the personal financial gain/loss of even major regulatory actions isn't a huge amount In whose mind? Most people would fight to defend 50$ like they are defending their life, especially rich ones from my experience. Add to that the spouse asking questions and that 15k is worth a million.

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.

JamesianP 4y ago
Making rules that avoid triggering irrational behavior is rather hopeless by definition though. For all we know a regulator once dated someone who worked at a company and the bad breakup makes them spiteful against the whole organization. The solution there has to be oversight to identify when a regulator is misbehaving. Though I'm fine with limiting their ownership to zero for purely rational reasons. A few thousand bucks worth of loss/gain might still sway small borderline decisions.
- MichaelCollins 4y ago
  I don't seriously propose that regulators looking at Apple should be forbidden from owning Apple devices; that's too impractical even though it would otherwise be a good idea. For practical reasons I'd give a pass to indirect investment through mutual funds/etc too. But forbidden them from buying any amount of AAPL directly? I think that's very reasonable.
  - JumpCrisscross 4y ago
    > forbidden them from buying any amount of AAPL directly? Once the investigation starts, absolutely. But forcing a regulator to sell their $10k stake in Apple prior to investigating them creates its own weird incentives.
    - iudqnolq 4y ago
      "You must do something with personal financial consequences if you want to start investigating Apple" isn't a workable improvement.
  - JamesianP 4y ago
    yes I was referring to stock ownership too, and only rational behavior. A phone probably won't change measurably in value from a regulatory decision, but $15k of stock certainly could.
  - yibberish 4y ago

calibas 4y ago

What if the stock is owned by a spouse?

francisofascii 4y ago

> Nearly one in four top FTC officials owned or traded individual stocks of tech companies While I agree a broad based fund will have allocations of these stocks and should be okay for them to own, but what are they doing owning individual stocks?

seanmcdirmid 4y ago
Micro managing their portfolios? I can also imagine a lot of them getting in on IPOs or later offerings before becoming FTC officials and not clearing those stocks out of their portfolio. But $15k...isn't a lot.
- alistairSH 4y ago
  $15k is ~1 months salary for a senior bureaucrat (GS scale) in DC metro. How many months income does it take to corrupt somebody? $15k into each FAANG is $75k, double the national median income. It all adds up a sizable potential conflict. This is roughly the same debate as Congress, just on a smaller scale. What is the balance between reasonable individual financial management and ensuring conflicts don't exist?
  - seanmcdirmid 4y ago
    > $15k is ~1 months salary for a senior bureaucrat (GS scale) in DC metro. That isn't income, profit, or gains, but just the actual amount of stock they can hold/trade at some time. Let's say they had inside information, $15k doesn't allow for much leverage to take advantage of that information. > How many months income does it take to corrupt somebody? Probably a heck of a lot more than you could earn on trading just $15k of stock.
    - alistairSH 4y ago
      Yeah, I suppose the real question is how active is their trading? And are systems in place to catch them if they do appear to trade on insider info? This is one of those situations where the possibility/impression of special access to gains is probably worse than any actual gains being made. And it's certainly a much smaller scale than what we saw with Congress ($10s of millions in some cases).

deleted 4y ago

[deleted]

varelse 4y ago

WheatMillington 4y ago

Sometimes I feel like I live on a different planet to the people on HN. I don't own $15k of ANY single stock. In fact I don't have significant savings outside of retirement savings (which I deliberately don't manage) of that magnitude. If I had $15k of any given stock, I'd have an extreme personal interest in the performance of that stock IDK, maybe it's that I don't work in tech and I'm too young or too old or whatever (37, 2 kids) but it just seems crazy to me to think that for some people $15k in any SINGLE stock isn't a meaningful amount of money.

grog454 4y ago
The point is: would you be willing to risk massive fines and jail time for making unethical decisions to try to turn your $15k into $30k if you did? Probably not. But if you could move your entire life savings into a stock the incentive for shady stuff increases significantly.
- WheatMillington 4y ago
  What are you talking about? There is no risk, the point is they're perfectly allowed to hold $15k in these stocks.
  - JumpCrisscross 4y ago
    > the point is they're perfectly allowed to hold $15k in these stocks They're not allowed to insider trade on it, or corruptly modify their regulatory duties on account of it, irrespective of whether is $1 or ten thousand.
  - ip26 4y ago
    The risk is doing something illegal or unethical to increase the value of their holdings. The larger their holdings, the larger the incentive to do that illegal or unethical thing.
Gh0stRAT 4y ago
There are people on HN working for the big tech companies who are being granted that $15k worth of stock every month. ($180k/year) At the more senior levels and/or with some stock appreciation, it's not unheard-of for >50% of compensation to be in the form of RSUs. Obviously they should sell-on-vest and diversify into index funds, but a lot of them choose to buy and hold some individual stocks that they're bullish on as well.

deleted 4y ago

[deleted]

modriano 4y ago

Is that limit on the cost basis of the position or would the conflicted regulator have to sell off some stock if their position exceeded the $15k threshold?

cma 4y ago

If they held $15,000 in Facebook, Google, Amazon, Apple, MS, Nvidia, AMD, Intel, Qualcomm, TSMC, that's $150,000, and often these companies are doing extensive intermixed deals with each other with exclusivity agreements and other similar stuff.

bern4444 4y ago

To further this, if you have 200k of VTI/VTSAX or of a non vanguard alternative, that's $15,000 of Apple stock alone. It's about 6% of VTI currently which will hold true of any broad based market fund. If you own a tech sector fund like VGT, Apple makes up 22% of the fund. So having 200k of VGT is going to be just shy of $50,000 worth of apple stock.

kyleblarson 4y ago

Do they specify that that 15k is in the underlying equity itself? If not, it is incredibly easy to use options to leverage the hell out of that $14,999.

quadcore 4y ago

Even if someone did own $15,000 of an individual stock, the personal financial gain/loss of even major regulatory actions isn't a huge amount In whose mind? Most people would fight to defend 50$ like they are defending their life, especially rich ones from my experience. Add to that the spouse asking questions and that 15k is worth a million.