Okay, so Daniel Gallagher, Michael Piwowar, Nino and his sidekick all seem to agree that insider-trading is, in fact, a crime. But what sort of crime? The SEC’s two Republicans think that it may sort of be a victimless crime, insofar as it isn’t always possible to figure out who the victims are, and insofar as the SEC staff worked way too hard convincing Steve Cohen to give it $602 million to go away to have it all go to some scummy plaintiffs’ lawyers.
In this case it will be incredibly difficult and expensive to identify and compensate the victims. In fact, it may not be possible to know who was harmed.
The only guaranteed winners will be administrators who distribute the fair fund and class-action lawyers who will take a significant cut of any funds paid to their clients….
These lawyers played no part in the commission’s successful enforcement action, yet they may now receive tens of millions of dollars as a result of the majority’s vote.
As for the berobed right, they also think it’s a crime—at least in the unfortunate Doug Whitman’s case. But only because he apparently asked the wrong question, and not as often as Preet Bharara thinks it's a crime. Others similarly situated would do well to give them a chance to say what, exactly, is and isn’t insider-trading.
The Second Circuit Court of Appeals thought a court does owe such deference, and so it sustained Whitman’s conviction based on the Securities and Exchange Commission’s interpretation of insider-trading law. Justice Scalia wrote that he doubts such “pretensions to deference,” and said “the rule of lenity requires interpreters to resolve ambiguity in criminal laws in favor of defendants.”
Whitman’s appeal didn’t directly concern the issue of deference, Justice Scalia wrote, “so I agree with the Court that we should deny the petition. But when a petition properly presenting the question comes before us, I will be receptive to granting it.”