Apr
12
Post #14- Nick Djamalidinov
April 12, 2015 | Leave a Comment
The articles today focused on insider trading, using information not disclosed publicly to gain some sort of advantage. It is illegal in the United States but the articles attack the insider trading laws. The main criticisms include focusing too much on minor issues and shying away from major cases as well using antiquated laws.
The first article talked about United States of America v Todd Newman, Anthony Chiasson, a case about insider trading that went the way of the defendants. The way I understood it, the court basically ruled that the defendants did not know the insider who leaked the information and were several levels away from him, therefore they are not guilty. Like I said, this is how I understood it so I may be completely wrong, but I do not agree with that decision. I do not think having a weak relationship to an insider should be dismissed if you gained from it and these guys got a lot of money in this deal. It was mentioned in the second article, that this case sets a precedent and an plan on how to commit the perfect crime. By using cutouts, middlemen of sorts, you just isolate yourself away from the insider and you cannot be prosecuted. This gives wall street guys complete immunity. I understand that the burden of proof should always be on the prosecution, but why do need to make these cases even harder? Wall Street people are experts at networking and are full of selfish, corrupt businessmen who would be thrilled to trade inside info. It is the perfect environment for this stuff to happen and now the court upholds this.
One criticism of the law seems to support the decision for the case mentioned previously. The articles said that insider trading laws are embracing the broken window theory. By trying small or minor crimes, they can stop the development of a crime-ridden society and discourage larger crimes. James Kidney believes that the theory leads to wasting a lot of money and time. He says most of the people he winds up prosecuting are very far removed from the case and are usually middle class people who have no real impact on the market so prosecuting them is not worth the insignificant damage they may cause to the market. I want to say I agree with James Kidney because prosecuting common folk who happened to some minor insider trading is a waste of time. This is why the criminal justice system highly encourages plea bargains. Going to court is expensive and no one wants to waste that money over some guy fighting against a speeding ticket. But I do see how allowing minor crime perpetuates a steady stream of crime.
James Kidney also claimed that the laws are outdated. He criticized the language of the laws and I do agree with him. The stock market has grown to something unimaginable by law makers. Just like with a lot of laws, I believe they need to be updated. For me, one example is the right to bear arms. That amendment was ratified during times of turmoil and uncertainty because Britain had a giant colony right above America, which was still a new and weak country. Now we do not need for common citizens to carry guns because there is no imminent threat of invasion. And the environment of the stock market has changed so much, that we need different laws. But the only way I can see real, effective change is if the government dedicated a certain amount of time to simply focus on these laws. The perpetual gridlock of the U.S government makes me pessimistic about the prospects of changes to the law, at least in my time.
The main thing I took away was that the broken window theory is looking at the wrong thing. Rather than looking to punish minor crimes, it needs focus on attacking the people who cause real damage to the economy. The government cannot shy away from prosecuting them or else it contradicts one of its founding principles: equality under law. The rich cannot afford to get away with insider trading like Chiasson and Newman. Furthermore, minor cases of insider trading should not be the first priority of the government. This may seem like it is attacking the rich but the rich have power to bend the laws so the government needs to be tougher on them to be fair.
