The Triple Crown of Republican Corruption
They did it! Both the House and the Senate of the Republican-led Congress and the President's office are ALL being run by actual criminals. I am not much of a historian, but has this been matched? Consider....
House Leader has now been indicted for criminal conspiracy Tom Delay; plus Tom has a series of other legal/ethical problems. Okay, so you may point out that Delay has temporarily replaced.......well, Delay was replaced by another corrupt Republican - Roy Blunt - who is married to a lobbyist, his parents are lobbyists, and he is closely tied to the same money laundering scheme that forced Delay to resign. These Republicans have no shame.
Senate Leader Bill Frist is under a formal investigation for illegal stock trading. It looks like Frist is going to be indicted. These illegal stock sales can often gets confusing, so people seem to tune out. I will make it simple: it is stealing money. It is no different from stealing money from a person's wallet. To me, this is the same (or worse) then any looting that occurred in New Orleans.
Then there is the Executive Branch. The Karl Rove scandal is heading back into the spotlight. Judith Miller has been released from jail and has agreed to testify. She will reportedly cite Scooter Libby (yes, Scooter) as one of the leaks. Scooter (yes, Scooter) is Dick Cheney's Chief of Staff. Then there is Rove, Bush's top advisor, who has his hands all over this, and may soon be facing a criminal indictment for outing Plame. (note: I am just focusing on current criminal investigations of the executive branch.....personally, I see a case for war crimes against Bush/Cheney directly, and homicide charges for the New Orleans response.)
House Leader has now been indicted for criminal conspiracy Tom Delay; plus Tom has a series of other legal/ethical problems. Okay, so you may point out that Delay has temporarily replaced.......well, Delay was replaced by another corrupt Republican - Roy Blunt - who is married to a lobbyist, his parents are lobbyists, and he is closely tied to the same money laundering scheme that forced Delay to resign. These Republicans have no shame.
Senate Leader Bill Frist is under a formal investigation for illegal stock trading. It looks like Frist is going to be indicted. These illegal stock sales can often gets confusing, so people seem to tune out. I will make it simple: it is stealing money. It is no different from stealing money from a person's wallet. To me, this is the same (or worse) then any looting that occurred in New Orleans.
Then there is the Executive Branch. The Karl Rove scandal is heading back into the spotlight. Judith Miller has been released from jail and has agreed to testify. She will reportedly cite Scooter Libby (yes, Scooter) as one of the leaks. Scooter (yes, Scooter) is Dick Cheney's Chief of Staff. Then there is Rove, Bush's top advisor, who has his hands all over this, and may soon be facing a criminal indictment for outing Plame. (note: I am just focusing on current criminal investigations of the executive branch.....personally, I see a case for war crimes against Bush/Cheney directly, and homicide charges for the New Orleans response.)
By Chuck - 9/30/2005
18 Comments:
Actually, there are some serious arguments that can be made that insider trading is not all that bad of a thing, particularly in this age of so much financial disclosure. In fact, it is often suggested as a better way of compensating employees and more closely aligning their interests with those of the company. A lot has changed since insider trading laws were first implemented.
It's stealing.
I tried to re-read your comments, but I cannot see how is it fair or beneficial for the market as a whole when a friend or family member calls their friend (who has nothing to do with the operation of the company) and says: "you gotta sell, in a few days we are announcing bad news".
Stock is not something I know a great deal about, but aren't the issues you speak of (compensating employees) dealt with in a few ways:
1) when you go public, you go public. its part of the deal - you primarily give up the right to help those close to you.
2) There is a reason that there are different types of stock. If you are worried about helping those closer, give them 'preferred' shares or participating shares, instead of common shares.
So, again, I can't see what you are saying.
Also, no offense, but isn't "in this age of so much financial disclosure" a bit naive?
BUMS AND LIARS!
Steve, you should explain your theory to Martha Stewart. That's like saying it is in the lottery's best interest to leak the winning number to their employees or friends of the industry.
Steve, either your a idiot, republican, or both.
hey anonymous, none of that. Steve seems like an independent thinker, and has been a nice addition to the site. His contribution is more then little one liners.
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While whether or not insider trading can actually be beneficial to some degree is a debatable issue (though you may disagree I have heard a number of economics professors argue this point), it is a far cry from real financial crimes like the accounting scandal at Enron. Insider trading rarely has a direct adverse impact on the other shareholders, or at least isn't stealing. All Insider trading really is is using "priviledged" information to make a decision, and it is illegal because that information is not available to everyone and leads to further market imperfections, not because it is stealing. It is much more similar to a team trainer betting against his own football team because he knows the running back isn't at 100% that week (as good an analogy as I can surmise at this point) than it is stealing, more using an unfair advantage. I do not in any way, shape, or form excuse someone for being caught for insider trading because anyone in business knows the rudimentary rules around it and should knwo to stay away form such dealings. Nonetheless, my point is that insider trading is not nearly as close to stealing as you seem to believe. Intentionally falsifying/misrepresenting accounting and earnings figures so as to make a company look more profitable is highway robbery though.
I love that no matter how brief these anonymous hecklers are, with their jabs at the intelligence of other people, that they always manage to make at least one grammar, spelling or usage error. It makes me smile every time.
Anonymous, for future reference:
(1) "Your" is possessive, you meant to say "you're" as in "you+are."
(2) If your noun starts with a consonant use the article "A." If it starts with a vowel use the article "AN."
Feel free to email me if you need a further refresher of 6th grade English.
In regards to Bob's post, I do apologize for the number of typing errors I make, especially constantly typing form when I mean to type from or knwo rather than know.
Chuck- Insider trading is not always guys selling their stock early with bad news pending either. People also regularly get in trouble for buying stock in a company they know is going to get bought out in the coming days. This was teh case of the recently indicted Ohio State University Professor Roger Blackwell, who sat on the board of directors for a company called Worthington Foods, which he knew was getting bought out by Kellog, who in turn told his wife's parents to buy Worthington Foods stock. Obviously his wife went and told severall other people, including some of his consulting firm's employees, who to avoid their own bouts with the law, turned Blackwell in to the SEC. Not exactly stealing, but not very fair either.
Enron and Worldcom did directly steal by claiming to have assets (cash, buildings, intellectual property, and especially receivables) that DID NOT EXIST, and still going on selling stock and compensating employees with company shares. Hopefully you can see my point somewhere in here, that selling ownership to something that doesn't exist is directly stealing as opposed to taking unfair advantage of priviledged information.
I also apologize for the lack of flow in my thought, but I am attempting to post in between month end accounting entries.
Darwal,
My comment was not directed at you in any way.
Spelling & grammar are not all that relevant in a political debate. I only mentioned it because every so often we get an anonymous chest-beating from the missing link, pounding out random insults on his keyboard that end up looking something like: "Your a ignorent ass-whole!!!"
I just hate anonymous personal attacks that don't even attempt to address the issue at hand. I encourage all other types of dialogue and would never otherwise bust balls over spelling or grammar.
Darwal: 1) When you go public, no one gets an advantage. Again, i am a novice on the topic, but I think the law is clear (and i think the law is logical).
2) Scenario 1: person sells stock 1000 shares at $30. Without the info, he would have sold at $25. Makes the person $5000.
Scenario 2: person goes on Ebay and claims to have a rare Star Wars toy. Sells it for $5010. Ends up it is a $10 toy. Makes the person $5000.
In scenario 1, $5000 was taken from the company or other shareholders (not totally sure).
In scenario 2, $5000 was taken from some specific individual.
How is the crime any different? The only answer could be, "the burden is spread out, so its like insurance fraud....and no one is really hurt by that" (but of course, we all know that is a silly response).
3) to me, this logic of it not being 'stealing' is like saying check fraud or credit card fraud is not 'stealing' because of little ways the facts can/may be twisted.
4) Obviously Enron stuff is worse.
5) Overall, I don't really care about these details. Frist is a jerkoff and a criminal. Maybe I am wrong on the degree of the crime. However, I think it is a matter of perspective. Rich men using illegal secrets to save thousands of dollars is WAY worse to me then some guy stealing a TV.
maybe i don't know what i am talking about on this stock stuff.
all i know is that the law is the law and Frist is being investigated for breaking it.
Just like Delay, just like Cheney's #1 guy, just like Bush's #1 guy.
Oh I definitely agree that anyone who gets caught for insider trading deserves to get nailed as long as it remains a crime.
The difference between your ebay and stock analogy is that with ebay the person is intentionally misrepresenting the product- essentially selling a fake that is supposed to be something else. Stock trading on the other hand is not the same. If i sell stock I know is going to drop, it is not like I sold you shares of Krispy Kreme Doughnuts (which are plummetting in recent months because of that lousy Atkins diet) and told you they were Microsoft shares. Furthermore, on ebay you set the price of item (for all intents and purposes with a reserve)but the stock market is dictated by market conditions and adjusts on its own. And, the money is not taken from the shareholders or the company, once the shares are issued the company does not directly benefit from increases/decreases in stock value-its shareholders do-and they can enforce some control on the company. The shareholders don't lose money due to insider trading either, because regardless of whether or not an insider sells his/her stock before bad news comes about, their shares are still going to go down.
The point still is he broke the law and should be punished.
Anonymous,
Idiot, thanks. Please don't insult me with that Republican nonsense. :-)
Everyone else,
Actually, I'm not sure how much I agree that insider trading is a good form of employee compensation. I was just throwing it out there because a lot of people hear "insider trading" and immediately think that it is evil, when in fact it is not quite that clear cut. There is some legitimate debate about the issue.
I think the idea is that if you, as an employee, are doing something or aware of something that will increase the value of your stock, you should be allowed "first dibs" on buying the stock at a cheap price before the word hits The Street. This gives the employees an incentive to increase the value of their stock without having to issue stock options that are actually a liability to the company and still have some dubious accounting associated with them.
I suppose you could flip that around and say that an employee could short his own stock if he was privvy to some information that indicated that the price of his stock would be dropping. This is true, but in the long-run this is probably not going to be the best way of making money off your company's stock.
The reason that this isn't such a bad thing is that the greater the number of people buying stock, the more they drive the price up and the less they are able to make. If 10,000 Microsoft employees all buy stock on the same day because they all found out good news the returns will decrease in order of purchase as they drive the stock price up.
I don't think it is AT ALL naive to say that this is an age of transparency in financial reporting. If you compare the reporting requirements that exist now to those that existed even a few decades ago this is obvious.
But I have the feeling that you're referring to the potential for Enron-esque situations. This is true, our financial reporting requirements aren't perfect, and the potential for those situations exists. But I think that potential will always exist. And when you think, how many companies are there in the United States? Hundreds of thousands? I think the percentage of Enron-type companies that have seriously defrauded investors is very, very, very small.
I shouldnt say much about disclosure stuff, because i don't know what much about it. but.....
how many companies were there 15 years ago? hundreds of thousands, just like today. Yet the MAJOR scandals that rocked the stock market have happened in the last few years.
Actually, Chuck, the perception that all of the major scandals have happened recently is probably due to the bias that we inherently have being alive now instead of thirty, fifty, or one-hundred years ago.
In fact, in the 1980's there were some absolutely enormous corporate scandals and disasters. The largest and most notable was in the Savings & Loan industry, in which THE ENTIRE INDUSTRY nearly collapsed altogether due to poor management. There was also a scandal in the late 1980's involving fraud in the issuance and use of junk bonds, as well as a large scandal in the treasury market.
And, of course, we don't have to mention what happened in 1929...
Corporate scandals come in waves. When the economy is doing really well people become a lot more willing to take risks to capitalize on good business. That's why the scandals were a result of the dot-com boom, and the scandals in the 1980's were the result of the economic conditions of that decade.
And, after the first scandal comes to light, other companies are put under much, much finer scrutiny, which results in a wave of scandals all being found around the same time.
Also, while I don't agree that we are seeing more and bigger scandals than we did in the past, wouldn't that be an indicator of an improved financial reporting system? Wouldn't you expect the number of scandals discovered to increase in the near-term as reporting got better?
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