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FOCUS | The Coin of the Realm: How Inside Traders Are Rigging America |
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Thursday, 18 December 2014 13:15 |
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Reich writes: "The Securities and Exchange Act of 1934 banned insider trading but left it up to the Securities and Exchange Commission and the courts to define it. Which they have - in recent decades so broadly that confidential information is indeed the coin of the realm."
Insider trading is not prosecuted aggressively. (photo: Paramount Pictures)
The Coin of the Realm: How Inside Traders Are Rigging America
By Robert Reich, Robert Reich's Blog
18 December 14
 few years ago, hedge fund Level Global Investors made $54 million selling Dell Computer stock based on insider information from a Dell employee. When charged with illegal insider trading, Global Investors’ co-founder Anthony Chiasson claimed he didn’t know where the tip came from.
Chiasson argued that few traders on Wall Street ever know where the inside tips they use come from because confidential information is, in his words, the “coin of the realm in securities markets.”
Last week the United States Court of Appeals for the Second Circuit, which oversees federal prosecutions of Wall Street, agreed. It overturned Chiasson’s conviction, citing lack of evidence Chaisson received the tip directly, or knew insiders were leaking confidential information in exchange for some personal benefit.
The Securities and Exchange Act of 1934 banned insider trading but left it up to the Securities and Exchange Commission and the courts to define it. Which they have – in recent decades so broadly that confidential information is indeed the coin of the realm.
If a CEO tells his golf buddy that his company is being taken over, and his buddy makes a killing on that information, no problem. If his buddy leaks the information to a hedge-fund manager like Chiasson, and doesn’t tell Chiasson where it comes from, Chiasson can also use the information to make a bundle.
Major players on Wall Street have been making tons of money not because they’re particularly clever but because they happen to be in the realm where a lot of coins come their way.
Last year, the top twenty-five hedge fund managers took home, on average, almost one billion dollars each. Even run-of-the-mill portfolio managers at large hedge funds averaged $2.2 million each.
Another person likely to be exonerated by the court’s ruling is Michael Steinberg, of the hedge fund SAC Capital Advisors, headed by Stephen A. Cohen.
In recent years several of Cohen’s lieutenants have been convicted of illegal insider trading. Last year Cohen himself had to pay a stiff penalty and close down SAC because of the charges, after making many billions.
SAC managed so much money that it handed over large commissions to bankers on Wall Street. Those banks possessed lots of inside information of potential value to SAC Capital. This generated possibilities for lucrative deals.
According to a Bloomberg Businessweek story from 2003, SAC’s commissions “grease the super-powerful information machine that Cohen has built up” and “wins Cohen the clout that often makes him privy to trading and analyst information ahead of rivals.”
One analyst was quoted as saying “I call Stevie personally when I have any insight or news tidbit on a company. I know he’ll put the info to use and actually trade off it.” SAC’s credo, according to one of its former traders, was always to “get the information before anyone else.”
Insider trading has also become commonplace in corporate suites, which is one reason CEO pay has skyrocketed.
CEOs and other top executives, whose compensation includes piles of company stock, routinely use their own inside knowledge of when their companies will buy back large numbers of shares of stock from the public – thereby pumping up share prices — in order to time their own personal stock transactions.
That didn’t used to be legal. Until 1981, the Securities and Exchange Commission required companies to publicly disclose the amount and timing of their buybacks. But Ronald Reagan’s SEC removed these restrictions.
Then George W. Bush’s SEC allowed top executives, even though technically company “insiders” with knowledge of the timing of their company’s stock buybacks, to quietly cash in their stock options without public disclosure.
But now it’s normal practice. According to research by Professor William Lazonick of the University of Massachusetts, between 2003 and 2012 the chief executives of the ten companies that repurchased the most stock (totaling $859 billion) received 58 percent of their total pay in stock options or stock awards.
In other words, many CEOs are making vast fortunes not because they’re good at managing their corporations but because they’re good at using insider information. It’s the coin of their realm, too.
None of this would be a problem if the only goal were economic efficiency. The faster financial markets adjust to all available information, confidential or not, the more efficient they become.
But profiting off inside information that’s not available to average investors strikes many as unfair. The “coin of the realm” on Wall Street and in corporate boardrooms is contributing to the savage inequalities of American life.
If Congress and the Securities and Exchange Commission wanted to reverse this and remove one of the largest privileges of the realm, they could. But they won’t, because those who utilize those coins also have a great deal of political power.
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FOCUS | The New Opening With the USA |
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Thursday, 18 December 2014 12:25 |
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Castro writes: "Since my election as President of the State Council and Council of Ministers I have reiterated in many occasions our willingness to hold a respectful dialogue with the United States."
Fidel Castro (L) with brother Raul Castro, who succeeded Fidel as Cuba's leader. (photo: Getty)
ALSO SEE: Carter 'Proud' of Obama on Cuba Policy
ALSO SEE: Success of Obama's Cuba Plan Hinges on Easing Economic Blockade
The New Opening With the USA
By Raul Castro, CounterPunch
18 December 14
 ince my election as President of the State Council and Council of Ministers I have reiterated in many occasions our willingness to hold a respectful dialogue with the United States on the basis of sovereign equality, in order to deal reciprocally with a wide variety of topics without detriment to the national Independence and self-determination of our people.
This stance was conveyed to the US Government both publicly and privately by Comrade Fidel on several occasions during our long standing struggle, stating the willingness to discuss and solve our differences without renouncing any of our principles.
The heroic Cuban people, in the wake of serious dangers, aggressions, adversities and sacrifices has proven to be faithful and will continue to be faithful to our ideals of independence and social justice. Strongly united throughout these 56 years of Revolution, we have kept our unswerving loyalty to those who died in defense of our principles since the beginning of our independence wars in 1868.
Today, despite the difficulties, we have embarked on the task of updating our economic model in order to build a prosperous and sustainable Socialism.
As a result of a dialogue at the highest level, which included a phone conversation I had yesterday with President Obama, we have been able to make headway in the solution of some topics of mutual interest for both nations.
As Fidel promised on June 2001,when he said: “They shall return!” Gerardo, Ramon, and Antonio have arrived today to our homeland.
The enormous joy of their families and of all our people, who have relentlessly fought for this goal, is shared by hundreds of solidarity committees and groups, governments, parliaments, organizations, institutions, and personalities, who for the last sixteen years have made tireless efforts demanding their release. We convey our deepest gratitude and commitment to all of them.
President Obama’s decision deserves the respect and acknowledgement of our people.
I wish to thank and acknowledge the support of the Vatican, most particularly the support of Pope Francisco in the efforts for improving relations between Cuba and the United States. I also want to thank the Government of Canada for facilitating the high-level dialogue between the two countries.
In turn, we have decided to release and send back to the United States a spy of Cuban origin who was working for that nation.
On the other hand, and for humanitarian reasons, today we have also sent the American citizen Alan Gross back to his country.
Unilaterally, as has always been our practice, and in strict compliance with the provisions of our legal system, the concerned prisoners have received legal benefits, including the release of those persons that the Government of the United States had conveyed their interest in.
We have also agreed to renew diplomatic relations.
This in no way means that the heart of the matter has been solved. The economic, commercial, and financial blockade, which causes enormous human and economic damages to our country, must cease.
Though the blockade has been codified into law, the President of the United States has the executive authority to modify its implementation.
We propose to the Government of the United States the adoption of mutual steps to improve the bilateral atmosphere and advance towards normalization of relations between our two countries, based on the principles of International Law and the United Nations Charter.
Cuba reiterates its willingness to cooperate in multilateral bodies, such as the United Nations.
While acknowledging our profound differences, particularly on issues related to national sovereignty, democracy, human rights and foreign policy, I reaffirm our willingness to dialogue on all these issues.
I call upon the Government of the United States to remove the obstacles hindering or restricting ties between peoples, families, and citizens of both countries, particularly restrictions on travelling, direct post services, and telecommunications.
The progress made in our exchanges proves that it is possible to find solutions to many problems.
As we have reiterated, we must learn the art of coexisting with our differences in a civilized manner.
Raul Castro is president of Cuba.
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American Police Unions: Why Mess With What Works? |
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Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=11104"><span class="small">Charles Pierce, Esquire</span></a>
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Wednesday, 17 December 2014 13:08 |
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Pierce writes: "Over at Josh's joint, he has an interesting study of how virulent the reaction from police unions has been to the recent spate of peace officers who are forced to make people dead who were unarmed entirely, or armed only with the arsenal also available to the kid in A Christmas Story."
Police officer pepper sprays UC Davis demonstrators. (photo: Louise Macabitas)
American Police Unions: Why Mess With What Works?
By Charles Pierce, Esquire
17 December 14
"A policeman hit me."
-- Lee Harvey Oswald, November 23, 1963
 swald was taken alive. Oswald got a press conference. Oswald got to claim police brutality in front of the assembled media. There were people still cleaning John Kennedy's brains off their wingtips, and Lee Harvey Fking Oswald, who they believed had murdered the president, was alive enough to talk to the media, even after having pulled a pistol on the arresting officers in the Texas Theater. Just sayin'.
We continue.
Over at Josh's joint, he has an interesting study of how virulent the reaction from police unions has been to the recent spate of peace officers who are forced to make people dead who were unarmed entirely, or armed only with the arsenal also available to the kid in A Christmas Story. As Josh points out, this reaction has ranged from Australian wildfire to thermonuclear. There has not been an ounce of reflection or pause in it. He quotes a professor who seems quite baffled by it all.
"It strikes me as being very strident, more strident than usual," William King, a criminal justice professor at Sam Houston State University in Texas, told TPM in a phone interview of the Cleveland police union's statement specifically. "Normally, it's a very procedural justice message: 'Just wait and see what the investigation finds,'" he continued. "These messages are different. They seem almost, perhaps, maybe, just a little bit antagonistic."
(Here would be a nice time to point out that one of the primary witnesses supporting that bag job of a grand jury finding in the killing of Michael Brown has been shown to be a bullgoose loony racist of the first rank. Well done, Bob McCulloch. The Black Sox were pikers compared to you.)
If I may be so bold as to offer an explanation to the professor, in their response to the bloody mayhem brought by some of their members, the unions are walking a trail very clearly marked by groups that have come before them. A long time ago, I mentioned that the basic philosophy on the American right -- which is pretty much where we find the unions in question, and almost all the support for the trigger-happy policin' of recent weeks -- can be summoned up by Stalin's order to the Red Army when the Germans came calling. "Ni shagu nazad."
Not one step backwards.
You could see how successfully this strategy works in all those long, poignant retrospectives in the newspapers and on television on the occasion of the anniversary of the Sandy Hook massacre. There was palpable momentum in the aftermath of the shootings behind sensible, if limited, gun control legislation. Instead of supporting this legislation, or meekly departing the scene for a moment, the NRA and its followers doubled up the intensity, tripled up the crazy, and fed Wayne LaPierre some mad mixture of crystal meth and Romulan ale and sent him out to rave and denounce all over the country. And, by and large, it worked. The Teachable Moment was exhausted trying to keep up, and there are now lots of places where you can carry your AR-15 to the pharmacy to pick up your anti-anxiety meds.
You can see how successfully this strategy works in the sad, awful polling data that has emerged since the Senate torture report was revealed. This data comes in the context of the various American war criminals who have embarked on their No Apologies tour, the lead act being Dick Cheney, who stated quite clearly that he simply doesn't care that we brutalized innocent people.
Six in 10 Americans say the CIA's treatment of suspected terrorists was justified, more than half think it produced important, unique intelligence - and 52 percent say it was wrong for the Senate Intelligence Committee to issue a report suggesting otherwise.
What we did was justified, but don't tell us about it because it will disturb the Exceptionalist diorama that we have built in our heads.
If the public has demonstrated its willingness to eat the omelettes without learning how the eggs were broken on these two obvious public policy disasters -- and that is being incredibly kind to their architects -- why wouldn't they Support Their Local Police in these times of trouble and woe and obvious danger? The unions have every right to feel confident that the public, eventually, and not necessarily slowly, will come around to their way of thinking. One of the chief ingredients that are crucial to the narcotic concoction that is American Exceptionalism is the idea that everything the country does is for the purposes of moving it toward...something, some hazy Utopia in The West where all will be forgiven and all will be justified by their faith in the fable alone. Therefore, any of the episodes of the country's basic brutality-- slavery, the genocide of the Indians, Jim Crow, the bloody reaction to the Civil Rights movement, the killing of a 12-year old boy by a cop who wouldn't have passed the competency test to be a crossing guard -- are seen as hurdles to be overcome on the golden road to some vague land of redemption, and not as demonstrations of a fundamental moral deficiency in the entire experiment that desperately needs to be examined before the country can move forward at all. We love the Teachable Moments as long as we don't have to learn anything from them.
Ni shagu nazad.
Not one step backwards.
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FOCUS | Jeb Bush v. Hillary Clinton: The Perfectly Illustrative Election |
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Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=7181"><span class="small">Glenn Greenwald, Guardian UK</span></a>
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Wednesday, 17 December 2014 10:59 |
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Greenwald writes: "Having someone who is the brother of one former president and the son of another run against the wife of still another former president would be sweetly illustrative of all sorts of degraded and illusory aspects of American life, from meritocracy to class mobility."
Former presidents Bill Clinton and George W. Bush. (photo: Jacquelyn Martin/AP)
Jeb Bush v. Hillary Clinton: The Perfectly Illustrative Election
By Glenn Greenwald, The Intercept
17 December 14
 eb Bush yesterday strongly suggested he was running for President in 2016. If he wins the GOP nomination, it is highly likely that his opponent for the presidency would be Hillary Clinton.
Having someone who is the brother of one former president and the son of another run against the wife of still another former president would be sweetly illustrative of all sorts of degraded and illusory aspects of American life, from meritocracy to class mobility. That one of those two families exploited its vast wealth to obtain political power, while the other exploited its political power to obtain vast wealth, makes it more illustrative still: of the virtually complete merger between political and economic power, of the fundamentally oligarchical framework that drives American political life.
Then there are their similar constituencies: what Politico termed “money men” instantly celebrated Jeb Bush’s likely candidacy, while the same publication noted just last month how Wall Street has long been unable to contain its collective glee over a likely Hillary Clinton presidency. The two ruling families have, unsurprisingly, developed a movingly warm relationship befitting their position: the matriarch of the Bush family (former First Lady Barbara) has described the Clinton patriarch (former President Bill) as a virtual family member, noting that her son, George W., affectionately calls his predecessor “my brother by another mother.”
If this happens, the 2016 election would vividly underscore how the American political class functions: by dynasty, plutocracy, fundamental alignment of interests masquerading as deep ideological divisions, and political power translating into vast private wealth and back again. The educative value would be undeniable: somewhat like how the torture report did, it would rub everyone’s noses in exactly those truths they are most eager to avoid acknowledging.
Marc Ash is the founder and former Executive Director of Truthout, and is now founder and Editor of Reader Supported News.
Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News. |
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