Posted on 03/22/2020 9:47:15 AM PDT by Kaslin
Four U.S. senators swear they didn’t use insider knowledge when they sold off stocks ahead of the coronavirus-induced record market crash. Americans are outraged, but what if so-called insider trading is a mere gimmick of the greater political establishment?
This is the age of the outsider. In politics, we have President Trump and Rep. Alexandria Ocasio-Cortez. In the economy, we have Uber and Airbnb. More than ever, being an insider carries a negative connotation.
Insider trading, then, must be nefarious. If only it had a legal definition. The U.S. Securities and Exchange Commission, that creature of Congress which acts as legislator, enforcer, and judge, defines it this way:
“...among other things, the purchase or sale of a security of any issuer, on the basis of material nonpublic information about that security or issuer, in breach of a duty of trust or confidence that is owed directly, indirectly, or derivatively, to the issuer of that security or the shareholders of that issuer, or to any other person who is the source of the material nonpublic information.”
Throw in a few Supreme Court cases, and the legalese starts to get complicated.
Essentially, the idea of making insider trading into a crime rests on the principle that information is a human right, that all market players have a right to the same information at the same time. It’s a utopian, communist notion that can’t work.
One more thought experiment before getting into these four U.S. senators.
The economist Robert P. Murphy asks what happens to a person who’s ready to buy shares of Acme, but then learns of a bad earnings report before it’s published and so decides not to buy the stock.
“Should this person be prosecuted for insider non-trading?” Murphy quips.
Some feel that it’s a different ball game altogether outside of the purely economic realm. When it comes to politicians, the public servants, our leaders, why shouldn’t anti-insider trading laws apply to them in some way?
It’s no wonder why so many Americans jumped all over the accused senators Richard Burr (R-NC), Diane Feinstein (D-CA), Jim Inhofe (R-OK), and Kelly Loeffler (R-GA). Average citizens aren’t cut any slack from the endless laws, red tape, and taxes hounding them day in and day out.
All four sold stock after being privy to information they chose to shield from their constituents, or worse, lie about to them. This is surely bad governance, but how should it be made illegal?
No constitutional rights were deprived. No property was damaged, no money stolen. Compare that to their voting records!
Now, Loeffler is a newbie, having been appointed to her Senate seat. She is awaiting a special election, but it would seem as though she’s in the fight of her life after selling over $1 million worth of stocks following a January 24 meeting of the Senate Health Committee covering the coronavirus.
Fox News’ Tucker Carlson did a solid job holding her to account. While Loeffler claims her stock market moves are all handled by a third party that updates her weeks after the fact, she evaded Carlson’s question about a March 10 video she released assuring Georgians that “the economy is strong.”
Loeffler’s message of calm and hope came less than a month after her financial advisors supposedly showed her for the first time her stock trades dating back to January 24. What’s more, Loeffler has worked in the financial industry for decades, while her husband is the chairman and CEO of the New York Stock Exchange.
Next is Burr, the chairman of the Senate Intelligence Committee. What does it take to reach such prestige? His record includes supporting the 2008 bank bailouts, withholding the 6,700-page Senate report on CIA torture, and blaming future terrorist attacks on Senators who don’t rubber stamp the most extreme mass surveillance powers.
It’s been reported that Burr sold between $628,000 and $1.72 million in stock at about the time he was being updated daily on the imminent coronavirus impact on Americans. During this time, he was co-writing an op-ed for Fox News that said, “the United States today is better prepared than ever before to face emerging public health threats, like the coronavirus.”
However, Burr follows the Hillary Clinton mantra: “You need both a public and a private position.”
Speaking at a North Carolina club where memberships run $10,000, Burr told the donor class quite the opposite, according to a leaked recording.
“There’s one thing that I can tell you about this: It is much more aggressive in its transmission than anything that we have seen in recent history,” he said, adding, “It is probably more akin to the 1918 pandemic.”
Burr went on to foretell of school closings and even the military being used when hospitals become overcrowded. However, he claims his stock sell-off was based merely on CNBC reports. It’s amazing how he read so much into public reports, while the rest of the market waited a week to crash.
Finally, we have Feinstein and Inhofe. Feinstein, together with her husband, sold up to $6 million in stocks, while Inhofe sold as much as $400,000. Like Loeffler, they have third party arrangements to handle their stock market moves.
On opposite sides of the political aisle, they unite often on the issue of war. Feinstein notoriously supervised appropriations for military contracts that benefited corporations her husband Richard Blum had strong financial interests in. Much poorer is Inhofe, who is a big war hawk anyway, be it promoting intervention in Venezuela, North Korea, Yemen, or heating up the cold war with Russia.
Do Americans actually believe they’re getting screwed over harder with insider trading than by these policies or general ineptitude and dereliction of duty?
Perhaps this media bandwagon of outrage is just too good an opportunity to miss. Who could be blamed for reveling in a story that ends with some probably crooked politicians being punished?
Unfortunately, there is a big catch that comes with this crusade against insider trading.
In addition to what has already been shown, that the absurd logic of criminalizing inside trading requires a universal human right to all market information, it should be noted that in practice, insider trading laws are simply the ruling bureaucratic elite’s means toward total power.
When someone with inside knowledge buys or sells stocks, the other trader who sells to or buys from the insider would have made the exchange anyway. There’s no victim, just as with any other voluntary transaction.
In fact, the inside trader’s buy or sell implicitly disseminates that hidden knowledge into the market, a real service for the keen observer. Millions of dollars’ worth of stock being dumped did indeed signal to other market actors that they should do the same, and some did. Not many, but a few did get out of the stock market before the crash, and they have inside trading to thank.
Insider trading is demonized no differently than how the radical left condemns “obscene profits.” The root of the attack is envy. Through envy, the state can easily move mobs in its preferred direction, and it can imprison those inconveniences, the disruptive capitalists.
“Profiting off a crisis” and similar rhetoric is an appeal to envy that Americans must see past in order to truly gain back their sovereignty.
What’s clear is that these senators lack the fortitude to be forthright with the people. And they’re not the only ones. Virtually all politicians keep up appearances of having things under control. When they inevitably lose control, because the world can’t be controlled, they overreact and overreach. Such is the story of coronavirus in America, where dependence on bureaucracy at home and abroad left millions vulnerable to disease, economic turmoil, and liberty restricted.
Now is the worst time to act on envy. This fragile society can’t handle it. Its institutions are hollowed out, the Congress being just one example of many.
The loss of public trust in institutions can be healthy when there is a moral foundation from which to rebuild. However, the reaction against these four senators is reflecting not just the low public trust, but a low social trust.
Just look at what the coronavirus scare is doing in major population centers, where there are scrimmages over toilet paper. How does the country come out the other side for the better?
If the mainstream media narrative, dripping with envy, is allowed to steer the public trust, it will have long-lasting ramifications for the country’s already declining social cohesion.
These four senators reveal deep fault lines in the political system and possibly society as a whole. The fix won’t be as simple as criminalizing insider trading.
“...but how should it be made illegal?...”
Firing squad?
Not about envy.
About what’s right and wrong.
If they don’t want the responsibility that goes with serving, don’t run.
Nothing to do with “information is a right”
Especially when those people can say things that influence the direction of stocks.
Anti-Insider Trading Laws Are About Envy, Not What’s Good for the Country“
This is libertarian bs. Anybody who sells stock knowing, on inside information, that it is going to tank is making a sucker of the buyer
The economist Robert P. Murphy asks what happens to a person who’s ready to buy shares of Acme, but then learns of a bad earnings report before it’s published and so decides not to buy the stock.
“Should this person be prosecuted for insider non-trading?” Murphy quips...
What an absurd argument.
So we shouldn’t enforce the law where we can?
I don’t understand how can they claim insider trading?? Burr’s stock transaction occurred February 13. Here are some headlines from January:
January 14: WHO said there may have been human-to-human transmission of the virus, Reuters reported.
January 15: Li Qun, head of the Chinese Centers for Disease Control and Prevention’s (CDC) emergency center, claims the risk of human-to-human transmission is “low,” the Journal reported.
January 17: After 12 days, the Wuhan Municipal Health Commission started giving daily updates on new cases of the coronavirus.
January 18: Despite the presence of the coronavirus, Wuhan holds a “potluck” banquet for 40,000 families to try and break a world record, The New York Times reported.
January 23: Wuhan is finally locked down, even though about 5 million people had already left the city without being screened by that time.
January 31: President Trump Bans Travel from China, Orders 1st Quarantine in 50 Years
Two weeks later Burr sells his stock. Please explain how there was insider trading involved? I don’t understand.
Yep. Insider trading is fraud because others have been told something that currently is known not to be true by others who then act on the truthful information to their advantage and usually to the disadvantaged of those that have been lied to.
The reason is that it is dead wrong. I thought the law was equal for all. Anybody else who did this would clearly go to jail.
I won’t even bother to read the article. It is warped and wrong headed. Clearly written without any objectivity at all. The bias in the opening paragraphs weighs heavily. It may as well have been written by the guilty parties.
1 minute delay between trades. This brute Force hacking of the market is baloney. Because we all know that’s what Free enterprise system is based on, sub micro second algorithm trading, right?
The author raises some excellent points here, but the underlying premise is wrong. Laws against insider trading aren’t passed because of envy. They’re aimed at protecting the ability of these companies to publicly trade their shares — because nobody would invest in the stock market if they thought it was rigged against them.
These senators need only explain that they thought the democrats were going to try to crash the stock market before the election. Its not insider news its just an opinion. A very reasonable reason to pull your money. Its not the virus. Its the impeachment, and Bernie that made him pull his money. Remember Bernie was pulling away with it at the time.
At least that is the excuse they should use.
And insider trading by senators for them is analogous to breathing - and we now know how they hide it just ask Hunter Biden. Seems like these senators got sloppy - i say we hang them (yeah i know standard response).
The ruling class should be very afraid of what is coming for them. When the economy collapses people wake up.
So the briefing was on Jan 24.The market rose in price from Jan 24 to Jan 31 when Trump announced the threat and cut off Chinese from flying in. Thus by Feb 1 everyone knew of the existence of the pandemic. Yet the market rose to new higher levels until Feb 20. The decline only started on February 20.The world knew of the pandemic well before then. When exactly did she sell her stock? If they sold the day after the Jan 24 meeting and the market continued to rise through that date and after Trump announced it to the country on Jan 31, it seems to me, there is not a lot of there there. I sold a little of my stock after Trump made the announcement based on his announcement and the stocks continued to rise for 3 weeks after that. I hope I am not investigated
You are correct, the law is not being applied equally. Chris Collins sits in prison while Hillary Clinton and Diane Feinstein walk free.
The fix is in. Who plays the market if you have no input on the outcome?
mmmm no. It’s about not screwing people over with knowledge they can’t possibly have.
I may be wrong about this, but I believe insider trading laws only apply if the “inside information” comes directly from the company whose securities are being traded. Having access to non-public information that affects an entire industry is different than having information that specifically relates to the inner workings of a publicly traded company.
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