Martha Stewart “avoided a loss of $45,673 by selling all 3,928 shares of her ImClone Systems stock on December 27, 2001, after receiving material, nonpublic information from Peter Bacanovic, who was Stewart's broker at Merrill Lynch.” (wiki)
The Galleon Group case ensnared Rajat Gupta (former head of McKinsey), who provided insider information that helped Galleon Group net a $17 million profit by tipping them off about Warren Buffett’s investment into Goldman Sachs during the 2008 financial crisis. Galleon Group’s owner, Raj Rajaratnam was a billionaire at the time of the insider trading.
SAC Capital (Stephen A Cohen’s firm, now known as Point 72) was charged with using insider information to generate $275 million in profits and averted losses. Cohen is a multi billionaire.
I recommend reading The Chickenshit Club. Given the institutional and resource constraints on regulators and prosecutors, the odds that you actually are punished are slim. Leaving aside any potential political machinations, behavioral economics resource has shown that humans generally value avoiding losses much more than making more money. Behavior like the endowment effect comes into play here. Bottom line, what may seem like pocket change for billionaires may cause “irrational” behavior.
These 2 instances in which they caught red-handed were simply the strongest cases that the U.S. government could bring.
Cohen is a multi-billionaire because he built a business which is designed to launder insider information into "clean" information without implicating himself or his lieutenants.
Raj Rajaratnam started at Needham & Co. in 1985, and worked his way up to firm president in 1991. He eventually bought the firm, and renamed it Galleon Group. If you look at the history of returns for Galleon, the most lucrative years were 1999 through 2002. Raj rode the tech bubble up, and got out before it burst. You don’t generate outsize, 90%+ returns solely on the basis of insider information.
As for SAC, for the vast majority of his career, Stephen A Cohen was a momentum trader in the style of Paul Tudor Jones. If you read the book Black Edge or watch the PBS documentary To Catch a Trader, at some point in the late 90s to early 2000s, Cohen started employing expert networks. The use of expert networks was legal at the time, and remains a grey area. Obviously, at some point Cohen crossed the line into outright insider trading.
My point for both of these examples was that both men were overwhelmingly rich by the time they got involved in insider trading. We can speculate on why they did it, but to suggest that they made their first hundred millions or billion with insider trading is inaccurate.
As to Raj you may be right I haven't followed as closely.
Whether insider trading should be illegal and what the lines are exactly is absolutely open to debate, but it seems clear that Cohen at least built his business to maximize his insider information edge.
Matt Levine has some good writing on the subject of insider information for the curious.
Also, all humans have it in their nature to test limits. And what we are seeing, among some of the wealthy and would-be wealthy in the U.S., is that with each egregious behavior, particularly financial and economic, the worst they face is a fine that most often represents a fraction of their profit from the behavior.
So, yes, I can see this. Get rich by not giving any money away unnecessarily, practiced diligently and relentlessly over years and decades, combined with the lesson that you won't be punished -- at least, not significantly.
So, why "waste" 31 million?
I don't know that this is what happened. But I can imagine it.
I'm not one of them, just service their stuff, usually with them watching me.
I'm constantly astonished over just how frugal they are. Their bodies are decaying, but as long as the assets grow; they seem happy.
Actually, many are lonely. Their kids just use them. People treat them nicely because they just might need them one day, and they know they are being placated.
They break laws to save a few dollars, while drowning in seemingly unending wealth?
The crimes are usually hidden, like hiring immigrants under the table--not even paying minimum wage, or shoplifting from Nordstrums. (I heard bigger department stores will not prosecute the better spenders. They will detain, and look up how much they spent in the past. If enough, the cops are not called.)
SEC/Taxes--it's just a game when you have the money to get out of a sticky situation. I can afford to break the law is part of the problem?
This is why I feel it time to tie Fees/Fines to Income.
I grew up around them, and they are different when they think no one is looking, or they think they can get away with with it.
I'll get hammered for bringing up the differences between the "classes", but I'm tired of glorification they get.
Buffet is one of the few I do like though.
I don't think this is true. We had the Bay of Pigs, the 1973 CIA backed coupe in Chile, the Iranian Contras ...
Every administration from the time I was born and from the time my parents were born has been hopelessly corrupt. Obama won a noble prize and then became the first president to spend every day of his term at war (or I guess every day in office in an extended military engagement since America has not technically been at war in a long time because we like changing the names of things to pretend they're not true). That and he predator droned a bunch of people, passed a useless health care act, etc.
I'm not saying the current administration isn't corrupt. It is, and it's not just the puppet on top. It's all the industry that funnels money into legislative and executive branches. Neither Bush nor Obama went after the corrupt housing industry that caused so many people to lose their homes.
Citizens united didn't cause the corruption. Corruption has been legal for decades.
This is unsupported opinion and does not serve to strengthen the rest of your statements: While the act certainly may have been useless to you, it was literally a matter of life-or-death to some Americans--for example those with "pre-existing" conditions. [1]
Furthermore, and of some interest to the Hacker News community, any step to divorce (American) health care from employment is of great importance to startups (small business), those in the gig economy, and should help to improve the overall "liquidity" of the employment market.
If by "useless" you meant that the act did not go nearly far enough, then we would agree. I'm not sure that was due to Obama's corruption but that of his opposition (with ties to the health insurance industry).
(As for the hypothesis that American government has been corrupt for decades, I would also tend to agree. Eisenhower warned of it and I'm sure it was going on decades before him.)
[1] http://www.latimes.com/business/hiltzik/la-fi-hiltzik-obamac...
https://fightthefuture.org/article/returning-to-america-and-...
I use to work in health care. The ACA is hopeless broken, unless you live in one of the lucky states (like Washington) where it's not. For most people, the deductibles are too high. They don't realize this until they need it.
Also, in 2017, medical debt is still the number one cause of bankruptcy. That's with government mandated private health care. That's after several years of it. No, it is broken, and the ACA is garbage. I downloaded that thing several times in 2008 during the debates. Did I read it? Of course not. It was 1800+ pages. I guarantee you no congressman or senior did either.
You could argue that the wars were started by previous administrations and ending them was harder than starting them.
Far more egregious was his administration's decision to classify all military aged men as combatants at bombing targets, regardless of whether they were combatants or not, so as to reduce civilian casualty counts:
https://www.theatlantic.com/politics/archive/2012/05/under-o...
His Nobel peace prize should be revoked.
The Iran-Contra affair did not involve Iranian Contras, it involved American officials making illegal arms sales to Iran and funneling the proceeds illegally to the Nicaraguan Contras.
> Obama won a noble prize
“Nobel”
> and then became the first president to spend every day of his term at war
Not even close. The US involvement in the Vietnam War began in the Eisenhower Administration and ended in the Ford Administration, so all of Kennedy, (Lyndon) Johnson, and Nixon spent every day of their terms in that war.
But even they weren't the first, the US was continuously at war (in an overlapping series of conflicts) from 1855-1875 (nearly exactly 100 years before Vietnam, both start and end; should we be particularly worried about 2055-2075?), with Buchanan, Lincoln, and (Andrew) Johnson spending their entire terms at war.
> since America has not technically been at war in a long time because we like changing the names of things to pretend they're not true
The United States has legally been in a war every time it's been in a Congressionally authorized military conflict (as well as certain other cases, perhaps, resulting from foreign attacks); the Supreme Court has repeatedly recognized that Congress need not use any particular language in exercising it's power to declare war, and that Congressional authorization in any language suffices to create a legal state of war, even if the effect is distinct from that of a formal declaration—this as far back as Bas v. Tingy, 4 U.S. 37 (1800).
(well... maybe Reagan. Iran-contra was shocking, and I'm a little surprised that nobody seems to think it was as big a deal as Watergate. Nixon cracked a safe. Regan... well, I'm not saying that this is what he did... but it sure looked like his deals with Iran delayed the release of US hostages until after the election. (you could also argue that those releases wouldn't have happened at all without those deals... I'm just saying, it looked pretty bad.)
But I agree with you that whataboutism is the wrong response to what's going on now.
> well... maybe Regan
Presumably you mean Ronald Reagan, though Donald Regan was a prominent figure in his Administration.
The people are sensitive to the distinctions in character between illegal and immoral behavior by institutions that seek to advance American geopolitical interests vs the gaudy and self-serving disregard for standards and norms that directly benefit Trump and his kids. Trump's image of corruption is further enhanced by his personal character which has shown him to be superficially dishonest, petulant and vengeful. Although... coups and endless wars sound a lot more morally bankrupt than Trump elevating his daughter and her husband into the ranks of power. So all Trump has to do is get through his presidency without starting a war...
Maybe this is why I am not rich. I just don't have the right mindset.