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Devils_Advocate
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http://features.csmonitor.com/economyrebui...sri-lanka-case/

I have a few questions about this man's mind.

How on earth could a hedge fund investor, who ran Galleon Group (a hedge fund), and who was willing to act on a free-market principle, betray all of that by supporting loads of democrats and a Socialist Guerilla group?

Now I can understand a man like Warren Buffet; he supports democrats, yes, but he also has managed to keep in line with regulations and has been pretty compliant with the government. He hasn't caused much major trouble, and is more moderate-democrat than Nancy Pelosi liberal.

But how can someone who commits insider trading support the very people who are most opposed to it - liberal politicians and socilaist guerillas? How? That's insanely illogical, I don't see how that can work! The man ran a hedge fund, not a subsidy seeking factory plant! He catered to enormous investors, he acted in defiance of government regulation and in favor of a very free market ideal by doing insider trading, and yet he supports left-wingers?

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http://features.csmonitor.com/economyrebui...sri-lanka-case/

I have a few questions about this man's mind.

How on earth could a hedge fund investor, who ran Galleon Group (a hedge fund), and who was willing to act on a free-market principle, betray all of that by supporting loads of democrats and a Socialist Guerilla group?

Now I can understand a man like Warren Buffet; he supports democrats, yes, but he also has managed to keep in line with regulations and has been pretty compliant with the government. He hasn't caused much major trouble, and is more moderate-democrat than Nancy Pelosi liberal.

But how can someone who commits insider trading support the very people who are most opposed to it - liberal politicians and socilaist guerillas? How? That's insanely illogical, I don't see how that can work! The man ran a hedge fund, not a subsidy seeking factory plant! He catered to enormous investors, he acted in defiance of government regulation and in favor of a very free market ideal by doing insider trading, and yet he supports left-wingers?

Why is Insider Trading a free-market ideal?

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Why is Insider Trading a free-market ideal?

Because it's a free market, not a "fair" market. Insider trading laws = Marxism.

[see http://capitalism.org/faq/insider_trading.htm]

As to why he may support Marxist politicians: I think Philosophy: Who Needs It might explain the source of this kind of doublethink:

"If you programmed your computer by conscious thinking, you know the nature of your values and emotions. If you didn't, you don't."

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Because it's a free market, not a "fair" market. Insider trading laws = Marxism.
Some of what's covered by "insider trading" is immoral and would rightly be forbidden, as breach of fiduciary duty. Of course, leave it to the government to create an invalid concept that subsumes "ham sandwich" and "digging a hole" under one term.
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If he professes to be a moderate Socialist, he probably got into insider trading not because he supports it, but maybe because he doesn't think of it in principles. His only concern might have been whether he can get away with it. I tried searching the internet for any statements he made in support of insider trading - I found none.

On a broader note, observe that Socialism is inherently inconsistent with metaphysical nature of man and existence. Therefore, it's not really a surprise that its proponents are notorious for not acting on principles.

Edited by Rockefeller
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I agree with the above post. Say I am an auditor at a public company with access to draft financial statements. If I call my trader buddy at Citibank and give him numbers ahead of the market that would be unethical as well as a civil and criminal act because I am entrusted with this confidential information. He can profit potentially millions of dollars and if all I risk is losing my job, that would not be enough of a deterrent.

That is why I never understood the arguments against insider trading laws because I believe that individuals like myself should not be able to profit asymmetrically when a fiduciary duty exists (by contract). I don't think it's "Marxism" to prevent certain individuals with privileged access to information to profit asymmetrically from that knowledge. Insider trading does not create wealth when you profit from such actions. You are merely conning the system. I'm not sure how capital markets would function without such safeguards.

I guess the counter argument is when a fiduciary duty does not exist. Well, what is the need for insider trading laws in that circumstance? I'm not sure. The markets should ultimately decide, but a certain level of transparency is needed. I think it's a thorny issue.

I also don't think it's good enough to go to some quote or website and say "hey, I found this here and it says insider trading laws are Marxist" and then think you have some kind of argument. I believe that Capitalism.org is an important website, but we cannot fall into the trap that many here do such as quoting Ayn Rand or some other person to defend a position and then calling it a day. It is lazy and it makes such positions rather tenuous to defend.

Edited by Toolboxnj
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I agree with the above post. Say I am an auditor at a public company with access to draft financial statements. If I call my trader buddy at Citibank and give him numbers ahead of the market that would be unethical as well as a civil and criminal act because I am entrusted with this confidential information. He can profit potentially millions of dollars and if all I risk is losing my job, that would not be enough of a deterrent.

That is why I never understood the arguments against insider trading laws because I believe that individuals like myself should not be able to profit asymmetrically when a fiduciary duty exists (by contract). I don't think it's "Marxism" to prevent certain individuals with privileged access to information to profit asymmetrically from that knowledge. Insider trading does not create wealth when you profit from such actions. You are merely conning the system. I'm not sure how capital markets would function without such safeguards.

I guess the counter argument is when a fiduciary duty does not exist. Well, what is the need for insider trading laws in that circumstance? I'm not sure. The markets should ultimately decide, but a certain level of transparency is needed. I think it's a thorny issue.

I also don't think it's good enough to go to some quote or website and say "hey, I found this here and it says insider trading laws are Marxist" and then think you have some kind of argument. I believe that Capitalism.org is an important website, but we cannot fall into the trap that many here do such as quoting Ayn Rand or some other person to defend a position and then calling it a day. It is lazy and it makes such positions rather tenuous to defend.

Nor do I think any of those things, but the reasoning provided to justify insider trading laws has little to do with contract enforcement or fiduciary duties (which certainly should be enforced) and everything to do with Marxist dogma about "fairness." I didn't even make any arguments, and I don't know who you are quoting there, I didn't say any of those things, I just linked to where the person can find out information on the subject if he is interested. The section of Capitalism.org I linked basically states the same thing that Mr. Odden clarified:

'Under the principles of agency law, firms may use "inside" information as employee compensation; or the company through its bylaws can restrict its use (only then can "insider trading" be punished by owners as a breach of a contractual obligation). In a free-market, investors choose the kinds of companies they want to invest in (rather then have the SEC choose for them): a company which allows insider trading, or a company that prohibits it, or a company somewhere in-between.'

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Why would you assume that once a person decides to support irrational causes and groups, such as extreme leftist organizations, he would use rational thinking to see what's in his best interest. If he was thinking clearly enough to realize he's supporting groups that want to destroy him he's thinking clearly enough not to support them in the first place.

Regarding insider trading it depends on the context. There is nothing inherently wrong with using one's superior knowledge of a situation to profit. An example would be buying stock in companys likely to be impacted by what your own company will do soon or betting on your own company. Breaking a confidentiality agreement to profit or adversely manipulating one's own company to profitably bet on your own rivals are both fraud. Pulling out of "We'rescrewed, inc" because you know your own company is about to drop them like a hot potato isn't immoral. You worked for the knowledge and aren't breaking any contract by utilizing it.

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But how can someone who commits insider trading support the very people who are most opposed to it - liberal politicians and socilaist guerillas? How? That's insanely illogical, I don't see how that can work!

Well, are they actually opposed to it? Maybe by words, but it is a way to make money "under the table". Ever wonder why some politicians are incredibly wealthy while doing a job that pays a relatively small amount...or are willing even to spend wild amounts of their own money above what they would make in that position? When in office, they know a lot of specialized information or even generate the regulations that will affect outcomes.

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Well, are they actually opposed to it? Maybe by words, but it is a way to make money "under the table". Ever wonder why some politicians are incredibly wealthy while doing a job that pays a relatively small amount...or are willing even to spend wild amounts of their own money above what they would make in that position? When in office, they know a lot of specialized information or even generate the regulations that will affect outcomes.

That's true. I've always wondered why so many seem to get away with it. I remember reading about when the Clinton's were still in Arkansas about this deal with a pig poultry outfit there. They passed some regulation or law that benefited the company and shortly after or shortly before Hillary made like $100k(a lot for them back then) in a year, off of an initial $1000 investment in poultry futures. Further, since she was using a 10% margin, it was interesting that the firm handling her investment never made any margin calls in spite of sec requirements. If that's not bribery, I'm not really sure what is. Filthy, corrupt whore.

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'Under the principles of agency law, firms may use "inside" information as employee compensation; or the company through its bylaws can restrict its use (only then can "insider trading" be punished by owners as a breach of a contractual obligation). In a free-market, investors choose the kinds of companies they want to invest in (rather then have the SEC choose for them): a company which allows insider trading, or a company that prohibits it, or a company somewhere in-between.'

Ultimately if there were no SEC or regulations governing markets investors would develop alternative systems to judging investments that are probably more effective. As an auditor, I believe that public companies would have more flexibility in their reporting which is ultimately judged by the market. At the end of the day, markets would balance as individuals would be able to balance the risks of material misstatement as this is now judged by the (corrupt) Big-4 accounting firms and the (corrupt) government.

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