“The government is reportedly close to filing charges in the largest institutional insider-trading investigation in history.
According to initial reports, the investigation could ensnare Wall Street's biggest names: Goldman Sachs, SAC Capital, Wellington, Jennison, MFS Global, Maverick, Citadel, and others. (Here's a who's who of who might get nailed.)
The investigation reportedly focuses on “expert networks” — consulting firms that pay industry participants to share insights and information with investors. Professional investors use these networks to gather information about real-time business conditions and trends in various industries (as well as, sometimes, information that could likely be characterized as “inside” information in any other context).
No matter where the investigation ends up, the government will likely present it as a huge step toward making the market “fair” for small investors. And the same small investors will likely view it as confirmation that the “game is rigged.”
I strongly disagree with Henry Blodget here in his conclusion that markets are corrupt so individual investors should not try to trade against the “insiders” but rather just passively hold the market indices and hope for the best. Excuse me? If the game is rigged such that free markets are not free, transparent, fair legitimate places to invest then we should just throw ourselves helplessly into harm's way and let the crooks toss around our life savings as they wish?
I have some other ideas, how about:
• Honest, ethical leaders step forward with some strength of character and do the right thing at long last.
• Stop taking hush money from the banksters and their lobbyists.
• Ban high frequency trading where a few gamblers use our public free markets as their own personal slot machines.
• Restore the Glass-Steagall divisions between banks and broker/dealers, so that product-pumpers can stop calling their long-always sales pitch “financial advice”.
• Stop bailing out the reckless risk-takers and their employers as they predictably crash and burn.
• Arrest and prosecute the insider traders with every letter of our law.
• Announce a new zero-tolerance policy for anyone found breaking the laws.
• Put the offenders in jail for terms commensurate with the size of their theft just as we do with fraud offenders and thieves in all other segments of our society.