Insider Trading: The Rule of Unreason

[ARI Media Feed]

Yesterday, the Supreme Court heard arguments in Salman v. United States, a case that illustrates the vague, arbitrary, and capricious nature of insider trading “laws.” Insider trading laws restrict people’s ability to buy and sell securities based on “material nonpublic information.” But what the government considers insider trading is often so nebulous that it amounts to ex post facto law: in many cases, it is impossible to know whether you’ve committed a crime until the government says you committed one.

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[dream_weaver]

From the ARI blog:

The question in the Salman case, then, is whether Maher received a personal benefit when he revealed information he learned at Citigroup. Maher did not trade on the information, nor did he receive any material benefit from his brother’s and brother-in-law’s trading activities. But a lower court held that because Maher passed along the information to help out the people he loved, that was enough of a personal benefit to make the action criminal. This led Cato’s Thaya Brook Knight to quip, “If they had loved each other less, would Salman still be facing prison?” 

Maybe. Altruism is about self-sacrifice. I think of the passage where Jim Tagger dropped a hundred dollar bill in a beggar's hand. 

He noticed that the beggar pocketed the money in a manner as indifferent as his own. "Thanks, bud," said the beggar contemptuously, and walked away.

James Taggart remained still in the middle of the sidewalk, wondering what gave him a sense of shock and dread. It was not the man's insolence—he had not sought any gratitude, he had not been moved by pity, his gesture had been automatic and meaningless. It was that the beggar acted as if he would have been indifferent had he received a hundred dollars or a dime or, failing to find any help whatever, he had seen himself dying of starvation within this night. Taggart shuddered and walked brusquely on, the shudder serving to cut off the realization that the beggar's mood matched his own.

Maher's crime, in some convoluted way, was that he was not indifferent enough. Even Mother Theresa would fail such a test, if she so much as developed any compassion for those she tried to assist.

Edited November 25, 2016 by dream_weaver