• 15 Nov 2011 at 1:07 PM

Some Zuccotti Park Thoughts On Insider Trading

It’s fun to get all riled up about insider trading! So let’s.

But first, I see you have some XYZ shares. Would you like to sell them to me? Here are some things you might want to know about it:
1. Warren Buffett is secretly buying loads of it.
2. Congress is going to do something that will make it go up, like kill pending legislation that would restrict its profits.
Let’s say I know those things and you don’t. I buy XYZ from you. Have I committed a crime? Maybe – but it’s not as easy as that.

Let’s start with what insider trading is. Actually let’s start with what it isn’t. Henry Blodget gives a popular simplification, “The definition of insider trading is trading while in possession of material non-public information.” If you think that, then clearly Congresspeople are committing crimes by trading on the knowledge that they’re going to earmark loads of cash to a company or deregulate it or just blow up the financial system or whatever they’re up to.

But that’s not the definition of insider trading, or at least of illegal insider trading. You can tell that by doing this little thought experiment:

1. Buffett knows he’s going to buy ten yards or so of IBM
2. He knows that that will move the market, so it’s material
3. He hasn’t told anyone yet, so it’s non-public
4. So he’s got “material” “non-public” information about IBM
5. He buys it anyway
6. Has he committed a crime?
Read more »

  • 12 Oct 2011 at 3:42 PM
  • taxes

Warren Buffett Opens His Kimono Ever So Slightly…

…and gives Congress a glimpse of the silver tuna. Want to see the full enchilada? The golden goose? The cast-iron baby arm? El Chorizo? Then you’re gonna have to get some other deep pocketed guys and gals to show what kind of heat they’re packing. You do that and WB promises he’ll give you the full autopsy results. Those are the rules. No tit? No tat. If anyone thinks he’s going to be the only one left standing naked, they can refer themselves to a fateful game of strip poker in ’57 from which he learned his lesson the hard way, and think again. Read more »

The Wall Street Journal has a totally maddening article today about insider trading by hedge funds who pay expert-network consultants to give them inside information about congressional deliberations. Which you’d think would have prosecutors demanding that they get 20 years in jail without any concern for their delicate constitutions, except no:
Read more »

In these volatile times it helps to have role models to steer you through economic uncertainty, wise investors who you can look to when your faith in markets is shattered. And that sort of wisdom is hard to find right now, what with John Paulson continuing to trip over his own feet and George Soros closing up shop / apparently not having the resources to house all of his girlfriends in the manner to which they are accustomed. Fortunately, Roll Call today brings us a new list of investors for you to emulate: the 50 richest members of Congress.

Would you believe that millionaires who are able to direct stimulus funds to their own companies and unconstrained by insider trading laws had a pretty good year in 2010? Then you would be correct. Our 50 richest members of Congress had an average net worth of $32mm, and saw a weighted average growth in their net worth of 17.7% (unweighted 26%).* The S&P was up 12.8%. Read more »

Here’s what they’ve got: we need to raise the debt ceiling. Read more »

  • 01 Jun 2011 at 12:13 PM

An Issue of National Securities

The following post is by Dealbreaker reader and commenter Infinite Guest.

President Obama has nothing to gain by negotiating with Republicans in Congress in order to raise the debt ceiling. The Department of Treasury doesn’t need Congressional approval to issue more debt and it will be a long time before Treasury actually needs to exceed the debt ceiling.

The analyses I’ve read on the topic are nothing if not variable, but they all assume at some level an agreement by all parties on the basic necessity of raising the debt ceiling and the general wisdom of reducing the deficit. The President knows what needs to be done, the Congress knows and so does the electorate. Based on this shared understanding, it follows that those who act in the spirit of compromise will be rewarded and those who act to obstruct
progress will be punished.

Never mind the compelling absence of evidence that any such shared understanding exists; that’s just not how things work. Read more »

This much they promise you. Read more »

Apparently she’s “rebuffed” their advances so far but they’re planning to persevere. Read more »