Warren Buffett - Insider Trading

[BeFranklin]

This may not be an instance of insider trading, but insider trading is a fraud. The corporate insider, simply by accepting employment, has made a contract with the shareholders to put the shareholders' interests ahead of their own, in matters related to the corporation. When the insider buys or sells based upon company owned information, he is violating his contract with the shareholders. Including the shareholder that he is transferring the asset with.

Good point. Fiduciary duty is important for the business world to exist, and almost this whole problem is a violation of one form or another of it.

Bail out this problem, and it won't solve the underlying problem of an ethical collapse. Else we would bail out poor hold-up artists, so everything would be alright

 

[forsmant]

Are you equating knowledge of future events to petty thugery on the streets? Should we punish all firsthand knowledge? Insider trading is illegal because of the envy of not knowing first.

 

[BeFranklin]

Are you equating knowledge of future events to petty thugery on the streets? Should we punish all firsthand knowledge? Insider trading is illegal because of the envy of not knowing first.

I was debating whether you even knew what fiduciary duty was. Now I'm sure. You should go back and reread the other users message. It was straight to the point.

 

[forsmant]

I was unaware of your belief in the duty to others before yourself. While not very nice insider trading is, nevertheless, a victimless crime.

 

[BeFranklin]

I was unaware of your belief in the duty to others before yourself. While not very nice insider trading is, nevertheless, a victimless crime.

Still don't know what it is.

 

[forsmant]

Still don't know what it is.

This is ridiculous. Since the Insider works for the company he has a stake in he cannot sell his property based on inside information. You are telling me that his ownership is secondary because he is directly inovolved in the bottom line of the company?

 

[BeFranklin]

This may not be an instance of insider trading, but insider trading is a fraud. The corporate insider, simply by accepting employment, has made a contract with the shareholders to put the shareholders' interests ahead of their own, in matters related to the corporation. When the insider buys or sells based upon company owned information, he is violating his contract with the shareholders. Including the shareholder that he is transferring the asset with.

+3

 

[cheapseats]

I was unaware of your belief in the duty to others before yourself. While not very nice insider trading is, nevertheless, a victimless crime.

This is false.

 

[forsmant]

This is ridiculous. Since the Insider works for the company he has a stake in he cannot sell his property based on inside information. You are telling me that his ownership is secondary because he is directly inovolved in the bottom line of the company?

+4

 

[forsmant]

This is false.

You are false.

 

[HOLLYWOOD]

They ALL DO IT!

The investment house themselves did a run on OIL, GOLD, and GREENGACK/Euro/Aus.

The big houses are ignored because they generate big tax revenues!

 

[forsmant]

I guess I am the only defender of Rothbard on this issue.

 

[forsmant]

..

 

[Knighted]

Insider trading is illegal because of the envy of not knowing first.

I never thought I would see a person who was a proponent of insider trading.. other than someone who engages in it.

But if insider trading was entirely legal, it would provide limitless opportunities for the corporate elite to swindle shareholders over and over and over again. I'd say the net result would be far less people willing to invest money into company stock, knowing that every corporate top dog would be loading up on shares before a big positive earnings announcement and dumping shares before a negative one, leaving public shareholders holding the perverbial bag. If that's not welfare for the rich, I don't know what is. Plus, with such a large drop in investment, the entire US economy would probably see a sharp decline in long term growth as a result. Insider trading = bad news.

 

[cheapseats]

Not So Fast

forsmant:
I was unaware of your belief in the duty to others before yourself. While not very nice insider trading is, nevertheless, a victimless crime.


cheapseats:
This is false.


forsmant:
You are false.

Noting that you are a Senior Member, I would offer assurance to those who may read my words that I am not a Provacateur. I am not just bopping around the internet trying to throw wrenches in people’s spokes.

I am on a mission, nearly complete. I volunteered two years of my life, like a goddamn tour of duty, to participate in the “national dialogue” in case some thought I might have, some way I might phrase it, might be helpful in what is CLEARLY my country’s time of distress.

Stranger than fiction, truly.

Forsmant asserts that insider trading is a victimless crime.

I claim that his claim is false.

His rejoinder, stunning for mental agility, is that I am false.

Consider Bernanke, Paulson and the other Suits disappearing behind closed doors. People on the INSIDE make decisions that will impact values and yet about which other investors are unaware.

Suppose Deciders at pharmaceutical company, based upon some disturbing research and a rise in consumer complaints, decide that their latest wonder drug is not so wonderful and may, in fact, expose them to massive class-action litigation that will assuredly send stock prices plummeting.

Their stock is trading high, because other people still think there’s a wonder drug that a few people now know is not wonderful.

They sell their own shares and tell their family/friends/colleagues to do the same, THEN announcing the bad news, with the early “inside” sell off broadcasting the stock’s vulnerability and driving the price down…for “outside” investors who would also like not to take a bath.

The “outside” investors are victims…setting aside the hapless patients.

Hence, my claim that forsmant’s claim that insider trading is a victimless crime is false. It would be easy enough but a waste of time to provide other examples of the criminal nature of insider trading. One has only to ponder technological and biomedical breakthroughs to appreciate the fortunes at stake.

Forsmant is obliged to back up his slanderous claim that I am false, or issue retraction.

The Oppressed will want to avoid resort to this tactic of the Oppressor, saying any old thing that pops into his head and serves his purpose. The Oppressors are still in power. The Oppressed will not want to give The Oppressors ammunition in the battle for internet sovereignty.

 

[forsmant]

forsmant:
I was unaware of your belief in the duty to others before yourself. While not very nice insider trading is, nevertheless, a victimless crime.


cheapseats:
This is false.


forsmant:
You are false.

Noting that you are a Senior Member, I would offer assurance to those who may read my words that I am not a Provacateur. I am not just bopping around the internet trying to throw wrenches in people’s spokes.

I am on a mission, nearly complete. I volunteered two years of my life, like a goddamn tour of duty, to participate in the “national dialogue” in case some thought I might have, some way I might phrase it, might be helpful in what is CLEARLY my country’s time of distress.

Stranger than fiction, truly.

Forsmant asserts that insider trading is a victimless crime.

I claim that his claim is false.

His rejoinder, stunning for mental agility, is that I am false.

Consider Bernanke, Paulson and the other Suits disappearing behind closed doors. People on the INSIDE make decisions that will impact values and yet about which other investors are unaware.

Suppose Deciders at pharmaceutical company, based upon some disturbing research and a rise in consumer complaints, decide that their latest wonder drug is not so wonderful and may, in fact, expose them to massive class-action litigation that will assuredly send stock prices plummeting.

Their stock is trading high, because other people still think there’s a wonder drug that a few people now know is not wonderful.

They sell their own shares and tell their family/friends/colleagues to do the same, THEN announcing the bad news, with the early “inside” sell off broadcasting the stock’s vulnerability and driving the price down…for “outside” investors who would also like not to take a bath.

The “outside” investors are victims…setting aside the hapless patients.

Hence, my claim that forsmant’s claim that insider trading is a victimless crime is false. It would be easy enough but a waste of time to provide other examples of the criminal nature of insider trading. One has only to ponder technological and biomedical breakthroughs to appreciate the fortunes at stake.

Forsmant is obliged to back up his slanderous claim that I am false, or issue retraction.

The Oppressed will want to avoid resort to this tactic of the Oppressor, saying any old thing that pops into his head and serves his purpose. The Oppressors are still in power. The Oppressed will not want to give The Oppressors ammunition in the battle for internet sovereignty.

In your example the execs should be held liable for the wonder drugs ill effects and the fraud that was perpetrated on the patients who used the drugs. Selling stock does not hurt anyone, selling tainted phamecuticals does. That is the crime. The investors may lose money but that is life. Life is not fair.

If someone overheard two executives from company ABD and XYZ talking about a merger over lunch and decides to buy stock in those companies and makes a profit he could go to jail for insider trading. He trades on superior knowledge than the guy who hears about the merger on CNBC and buys stock with the rest of us. There is no fraud in this example of insider trading. You should focus on the actual crime rather than the fact that they sold their stock.

Perhaps we should continue to level the playing feild so that no one can have superior knowledge of events than any other. Lets make it fair for everyone. This egalitarian thought is frieghtening to me and should be to you, too.

 

[forsmant]

I never thought I would see a person who was a proponent of insider trading.. other than someone who engages in it.

But if insider trading was entirely legal, it would provide limitless opportunities for the corporate elite to swindle shareholders over and over and over again. I'd say the net result would be far less people willing to invest money into company stock, knowing that every corporate top dog would be loading up on shares before a big positive earnings announcement and dumping shares before a negative one, leaving public shareholders holding the perverbial bag. If that's not welfare for the rich, I don't know what is. Plus, with such a large drop in investment, the entire US economy would probably see a sharp decline in long term growth as a result. Insider trading = bad news.

Insider trading can never be tamped out of existence. Low level managers from different companies drinking at a bar could be held liable for insider trading for making small talk about their companies mergers, new ideas or new products. Nevermind the freedom of speach thing we are sopposed to have here in America.

Insider trading gives the government a reason to go after out of favor companies and political enemies for frivilous, if not, envious reasons.

Your argument reeks of evny of these rich guys who know things first. Grow up life is not fair and should not be legislated to be fair.

 

[cheapseats]

In your example the execs should be held liable for the wonder drugs ill effects and the fraud that was perpetrated on the patients who used the drugs.

No question, but that is a separate issue/crime.

Selling stock does not hurt anyone, selling tainted phamecuticals does. That is the crime. The investors may lose money but that is life. Life is not fair.

No question about that either, life ISN'T fair.

But you are wrong that someone buying or selling at preferential rates based on inside information that other investors couldn't possibly know DOES unfavorably impact other investors.

That is WHY insider trading is crime. And insider trading IS a crime.

If someone overheard two executives from company ABD and XYZ talking about a merger over lunch and decides to buy stock in those companies and makes a profit he could go to jail for insider trading.

False. If someone overhears this or that in the course of ordinary living, it's happenstance...good or bad fortune, depending. If someone pieces together this bit of hearsay and that bit of reading...add a tarot card reading, what the hell...it's research.

Now if those two executives buy/sell stock based on an intended merger of which other investors are unaware, THAT'S insider trading.

He trades on superior knowledge than the guy who hears about the merger on CNBC and buys stock with the rest of us.

One guy listens to Jim Cramer, one guy studies financial reports, another swears by the Kiplinger letter...people's portfolio balances will determine who's working with superior information, or who just works smarter, or even who's luckiest.

Inside information is a whole different ballgame. Think the difference between a surgeon having seen the xrays and NOT having seen the xrays. The surgeon who has studied the xrays first is liable to

A.) diagnose better what surgery is called for and
B.) execute it in a more timely fashion

There is no fraud in this example of insider trading.

Agreed about the eavesdropper. The executives on the "inside" are a kettle of fish.

You should focus on the actual crime rather than the fact that they sold their stock.

Believe you me, I AM focused on actual crimes. In particular, I am focusing on price fixing, monopolies, and conspiracies in restraint of trade. I don't know about anyone else, but I'm playing for prison sentences. I just hope it's them and not me who gets locked up. God knows, it SHOULD be them and not me.

Perhaps we should continue to level the playing feild so that no one can have superior knowledge of events than any other. Lets make it fair for everyone. This egalitarian thought is frieghtening to me and should be to you, too.

Disingenuous, like calling me false.

 

[forsmant]

No question, but that is a separate issue/crime.

No that is the only crime.

No question about that either, life ISN'T fair.

But you are wrong that someone buying or selling at preferential rates based on inside information that other investors couldn't possibly know DOES unfavorably impact other investors.

That is WHY insider trading is crime. And insider trading IS a crime.

It impacts other investor unfavorbably because they get the knowledge second hand. That is unfair to the investors and they are pissed. It is not a crime to have superior knowledge. Well it shouldn't be anyway.

False. If someone overhears this or that in the course of ordinary living, it's happenstance...good or bad fortune, depending. If someone pieces together this bit of hearsay and that bit of reading...add a tarot card reading, what the hell...it's research.

Now if those two executives buy/sell stock based on an intended merger of which other investors are unaware, THAT'S insider trading.

Oh dear they are acting on superior knowledge. Put them in jail. Its not fair that they know and we didn't!

One guy listens to Jim Cramer, one guy studies financial reports, another swears by the Kiplinger letter...people's portfolio balances will determine who's working with superior information, or who just works smarter, or even who's luckiest.

Inside information is a whole different ballgame. Think the difference between a surgeon having seen the xrays and NOT having seen the xrays. The surgeon who has studied the xrays first is liable to

A.) diagnose better what surgery is called for and
B.) execute it in a more timely fashion

Those with first hand knowledge are liable to make better and more informed decisions.

Agreed about the eavesdropper. The executives on the "inside" are a kettle of fish.

I don't undestand.

Believe you me, I AM focused on actual crimes. In particular, I am focusing on price fixing, monopolies, and conspiracies in restraint of trade. I don't know about anyone else, but I'm playing for prison sentences. I just hope it's them and not me who gets locked up. God knows, it SHOULD be them and not me.

I don't see how insider trading is monopolistic, price fixing, or restrains trade. Insider trading is trading, the opposite of restraint.

Disingenuous, like calling me false.

It sure seems to me that you want the execs to play fair by letting everyone know what is going on before making decisions on their own well being. You threw in the one liner about false first. Get over it.

 

[cheapseats]

I don't undestand.

I know.

Devotion to maximum personal liberty does not mean throwing "fair and square" business practices out the window. There's plenty of money to be made without shenanigans.

"Fair and square" is the essence of Law.

Insider trading IS a crime. Ask Martha Stewart.