The US Securities and Exchange Commission (SEC) announced Wednesday it charged three former Netflix employees and two of their contacts with insider trading that resulted in a net profit of over US$3 million. Netflix's internal culture and policies have long been the stuff of intrigue and reflection. Founder Reed Hastings …
I really dislike the concept of financial settlements made that allow the guilty to get away without admission of guilt.
It may free up court time and the cost of prosecution but it does so at the cost of truth and justice. It also benefits those with means to fight in the courts with armies of lawyers, something denied for the most part to ordinary people.
If they buyed their way out of the court, they can buy their way out of the headlines. Nobody except for a bunch of nerds will notice their wrongdoing and take action against them to socially punish them.
To paraphrase Marx. whoever owns the means of consent manufacturing, rules the society.
The implication though of not admitting the blunders to the public is that they have not learned any lessons from the incident.
As quaint as it is to see Japanese board members bowing low in public, it is at least some sign of contrition and humility and that perhaps at least some of them have taken notice.
When a large company like Pearson, with a woefully dire public image anyway, dodges admitting their culpability with such an awful catalogue of wilful errors of judgement, there is no sign that they wouldn't just do it again. The fine is just a cost of doing business.
With the Pearson case, it was likely that the communications in question were written by the Communications department and checked by lawyers, honesty, clarity and definitive statements are not a strong points of either departments. Those that actually know what happened probably never got a look in.
Some of these muppets should work in the finance industry, even as IT bods we have to do 5 mandatory anti money laundering and anti-fraud training courses every 6 months! Boring as hell but when you hit the bit about "You personally will do time starting at 5 years minimum if you..." and "You may have to surrender all your assets if caught doing..." you tend to start taking it deadly serious!
A friend and I talked about how to do insider trading correctly once, as a hypothetical. We decided that a scheme where I gave him inside information I had and he gave me inside information he had, and we shared that information with friends the other had never met was step one, rather than having acting on each others' information directly. Also you never use the same friend twice, because one jackpot is luck, two is highly suspicious, and three is an obvious crime. You need to choose friends you know some sort of secret about - like cheating on their wife or something that would be publicly embarrassing if revealed, to insure they keep quiet and don't screw you by sharing the information with people they know and put a big flashing red light over them with the SEC.
Second, those people would need to start making options trades on that company before we gave them info, and on a couple of other companies as well. The people who are caught always seem to be dumb enough to make only wildly successful trades, which stick out like a sore thumb to the SEC. You need to throw some noise into the system so it just looks like they got lucky, because people get lucky all the time and the more regular options trades that are slight wins, slight losses, or expire out of the money the more they look like someone who just happened to beat the odds one time. They also need to keep buying options for a little while after the big hit - real gamblers never stop for long after they win the jackpot. It needs to look like they were trying for a second hit, but gave up after a few times when they realized they'd never get that lucky again.
Third, the kickbacks need to be paid in cash, and the friends need to be careful to make a bunch of regular withdrawals to accomplish this to avoid triggering FDIC hits - if examined it would look like a gambling problem or a mistress, not cash kickbacks. A gambling problem would be easy to believe for someone who had no history of buying options until they started and not long after scored a huge win, and reduces suspicion they somehow acquired insider info.
Lastly, it would work even better with a larger ring, if you had a half dozen people you could spread the tips more widely so no one connected to you wins a second time with the same stock, at least not for a few years.
"Two can keep a secret, if one of them is dead."
That's why it remained a hypothetical. If we could do it between just the two of us with the near zero chance we thought the above plan had might have considered it. But having to constantly bring in other people to insure we didn't leave a trail only leaves you with a bunch of people who you have to worry might get arrested for some unrelated crime and turn you in in exchange for a lighter sentence.
I mean, obviously someone willing to do this probably has a higher chance of getting arrested for tax fraud, for instance. The IRS comes knocking and they say "what if I expose a big insider trading ring where the ringmasters are getting paid in cash they aren't declaring as income" and suddenly the IRS is knocking on my door. Not worth it!
But I can see some people with a higher risk tolerance or maybe have connections that would let them squirm out of something like this if caught doing it. I'm sure there's some of it going on - bunch of guys who went to prep school together, then on to Ivy League schools and jobs on Wall Street or in big corporations, and think they're entitled to screw the system and get richer than they already are, and feel they're untouchable.
"bunch of guys who went to prep school together, then on to Ivy League schools and jobs on Wall Street or in big corporations, and think they're entitled to screw the system and get richer than they already are, and feel they're untouchable"
You may have seeded here the next Hollywood blockbuster movie...