He’s got friends in low places

An American dollar in every shack

Gutpa gets two years. His tip of insider information to Raj cost no one anything.

Feds sue BOA and Countrywide Mortgage to recover the $1 billion it cost the government to cover Countrywide’s fraudulent mortgages.

Who’s going to jail for the Countrywide theft?


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10 responses to “He’s got friends in low places

  1. Inagua

    “His tip of insider information to Raj cost no one anything.”

    How about the people who sold to Raj? They might not have sold if they knew what Gupta told Raj. Do you think trading on confidential, non-public information should be made legal?

  2. Fred2

    Works for Congress.

  3. Anonymous

    Trading on confidential, non-public information is legal. It is only illegal if that information is also material.

    Chris, why do you think trading on inside information should be made legal?

    • Because there are no victims – insider trading didn’t used to be illegal and it only reached its current level of harsh penalties in that Supreme Court case involving a guy who worked at a financial industry printer in, I believe, the early 1980’s, when I was in school, so it’s a new “crime”, not some long-standing rule.
      There used to be an argument to be made that some people having and trading on information that others didn’t corrupted the marketplace, but these days trades are made by computers in milliseconds and the hold and buy, analytical trading simply isn’t done, except by retail chumps, and they (we) make up an insignificant, irrelevant part of the market.
      Let’em loose, says I.

  4. Anonymous

    When do the taxpayers get to sue or pillory Chris Dodd and Bawney Fwank?

  5. Anonymous

    Do you not believe the people that sold the shares without the information are not victims? How are they not?

    • Because they were going to sell anyway – people sell for lots of reasons: cash needs, tax purposes, a desire to capture their gain, etc. And people buy for any number of reasons too. There’s no level playing field in information on this stuff and the pretense that there is is just that: a pretense, to keep the marks coming back for more. Wall Street’s for major institutions, not chumps, and we’re just there to add a veneer of respectability.

  6. Inagua

    Anonymous is correct, the information must be material.

    Chris is incorrect, the level playing field is more than a pretense. It is an imperfectly met goal that government strives to achieve. Without such a goal, the stock market would become more corrupted and cheats likes Boesky and Raj would remain celebrated rather than disgraced.

    Giving up on regulation because the cheats are clever is not a wise policy for a market that holds a significant chunk of the retirement savings of most Americans.