> the SEC really seems to only go after small timers

Insider trading is a fuckwit sport. The N != NP asymmetry of executing an insider trade, profitably and discreetly, against the simplicity of looking for weird trades ex post facto leads most with money to conclude it isn’t worth it. The meme about the lawlessness of finance tends to be held by those furthest from it.

I humbly submit to you hypothesis that the lawlessness of finance is so pervasive that it has effectively become legalized through intellectual and regulatory capture. If you're interested in supporting evidence for this idea, check out how Enron sought and acquired SEC 'approval' for their ponzi instruments....

> the lawlessness of finance is so pervasive that it has effectively become legalized through intellectual and regulatory capture

Right, this is the popular narrative, and it’s why numpties think they can get away with trading out-of-the-money calls on tenders.

> check out how Enron sought and acquired SEC 'approval' for their ponzi instruments

Source? Because the SEC doesn’t approve (or deny) corporate instruments. It regulates disclosure.

Well official disclosure in finance is very similar to assigning value, since many of the instruments that actually trade are derivative or abstract representations of actual assets with 'real' value.

My only point is that the notion of 'legal' can get very fuzzy when you're talking about an industry with so many private/self-interested entities that rival or exceed intellectual/manpower of the agencies responsible for regulation.

If you want to learn more about the SEC's role or dereliction of duty in the Enron case you could start here: https://www.investopedia.com/updates/enron-scandal-summary/#...

Google could lead you to more evidence, if you wish to explore the hypothesis further...

> many of the instruments that actually trade are derivative or abstract representations of actual assets with 'real' value

They’re all derivative.

> the notion of 'legal' can get very fuzzy when you're talking about an industry with so many private/self-interested entities

Sure. You’re describing ambiguity outside securities trading.

> more about the SEC's role or dereliction of duty in the Enron case

I asked for one example of something the SEC had a mandate to do that it didn’t.

The SEC has a three-part mission: to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.

These mandates are, of course, subjective and vague enough to be interpreted a variety of ways whether you view 'investors' as institutions, households, individuals, etc... What you define as 'fair/orderly/efficient', and what meaningful 'capital formation' really is.

When SEC approved Enron's change in account reporting practices from historical cost to mtm, I would argue that the SEC failed it's mandate to protect investors by allowing disingenuously optimistic instrument valuations. You could argue that eventually the SEC fulfilled its mandate by recovering much of the misappropriate funds, but it's hard to say they didn't also facilitate the disorder in approving these instruments given how that story concludes with a corporate collapse and flurry of regulation...

https://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act

> When SEC approved Enron's change in account reporting practices from historical cost to mtm, I would argue that the SEC failed it's mandate to protect investors by allowing disingenuously optimistic instrument valuations

In a broad sense, sure. But that means making the SEC both an auditor and determiner of fair value. Even after the ensuing flurry of rule making, that is very much not part of the SEC’s remit.

There is a reasonable debate to be had around whether it should be. But the SEC not double checking auditors is not evidence of its lawlessness.

The financial markets are more than the SEC but the SEC is part of the financial markets. Evidence of the SEC's imperfect lawlessness implies the greater financial markets are also, in part, lawless.

But my point wasn't even to say whether a given industry as broad as finance is 'lawless' or not, that's your sweeping strawman. I was just saying that in Finance of ALL industries, the line between lawful and illegal has been, and continues to be literally, morally and philosophically blurry...

> Evidence of the SEC's imperfect lawlessness implies the greater financial markets are also, in part, lawless

By this logic lawlessness anywhere means lawlessness everywhere.

> my point wasn't even to say whether a given industry as broad as finance is 'lawless' or not

You said the “lawlessness of finance is so pervasive that it has effectively become legalized” [1]. You cited the SEC in respect of Enron as an example. I “asked for one example of something the SEC had a mandate to do that it didn’t” do with Enron. You ignored the question and started pontificating on not the law but legal philosophy.

You continue to evade that first question. Now you’re claiming you didn’t make the first statement.

This is arguing in bad faith.

[1] https://news.ycombinator.com/item?id=40890110

To maybe help you alleviate a small bit of your presumably nearly overwhelming confusion I will repeat my reply to your SEC question[1], if that is indeed the 'first' one you ambiguously refer to.

> When SEC approved Enron's change in account reporting practices from historical cost to mtm, I would argue that the SEC failed it's mandate to protect investors by allowing disingenuously optimistic instrument valuations

I'm not sure what about that you think is evasive but I'd like to end the conversation here regardless.

[1][Whats] one example of something the SEC had a mandate to do that it didn’t.

Yeah, if he had made $107M instead he would have had the lawyer power to go free.

In April 2022, Elon Musk bought 9.2% of Twitter. He was legally required to file a disclosure notice when his ownership exceeded 5%, but he didn’t. This allowed him to keep buying billions worth of stock for cheaper because the price immediately went up when his ownership became public.

Obvious violation of securities laws, with hundreds of millions in profit. Who knows if he’ll ever be held accountable. Musk seems to delight in mocking the SEC.

> Obvious violation of securities laws, with hundreds of millions in profit. Who knows if he’ll ever be held accountable

It’s in court [1] and under investigation [2].

[1] https://www.reuters.com/technology/musk-suggests-late-twitte...

[2] https://www.politico.com/news/2024/05/30/musk-agrees-to-test...

Congress exempts itself from insider trading laws. There is a 'Nancy Pelosi stock tracker' Twitter account that tracks Congressional buying and selling of stocks.

> Congress exempts itself from insider trading laws

Not true [1]. (Enforcement leaves much to be desired.)

[1] https://en.m.wikipedia.org/wiki/STOCK_Act

Pretending to be subject to a law however in practice never prosecuting opens the door to inconsistent (aka selective) enforcement. How is this not the worst of both worlds? What a weird gotcha....

> subject to a law however in practice never prosecuting opens the door to inconsistent (aka selective) enforcement

Enforcement opens the door to selective enforcement. A lack of enforcement precludes it.

And the STOCK Act has been enforced [1].

[1] https://en.m.wikipedia.org/wiki/2020_congressional_insider_t...

You've got it backwards mate, a lack of enforcement isn't an agreement or resolution or much of anything reliable or solid or sound. This vacuum of enforcement actually ENABLES selective enforcement because a lack of enforcement isn't an official stance but technically at odds with the written law: It's an implicit status quo that could be changed any time and when it does, you could become retroactively liable for behavior that was acceptable under the prior status quo. That is precisely the conditions of selective enforcement: the choice of the enforcer. Under these inconsistent regulatory modalities you may insidiously lose valuable rights like: No Bill of Attainder or ex post facto Law shall be passed.

> vacuum of enforcement actually ENABLES selective enforcement

Prosecutorial discretion enables selective enforcement. Our drug laws are massively enforced; that doesn’t change their selectivity.

> an implicit status quo that could be changed any time

So is a history of enforcement!

Laws and their enforcement will always have some nonzero amount of selectivity by the localized nature of the universe but good legislation confronts these challenges proactively and tries to make prosecutorial discretion closer to the question: What should the Punishment be? Rather than: Is this behavior Punishable?

>> an implicit status quo that could be changed any time

> So is a history of enforcement!

Are you really saying that history can be changed at any time?

While there will always be jurisprudence that attempts to advance precedent, a history of consistent enforcement cannot, in fact, be changed. People will always have vulnerability to novel interpretations and surprising re-interpretations of the law, but laws which sit on the books IGNORED can easily lead to essentially undefined behavior which I have no doubt you can understand the potential pernicious nature of...

Most big timers also come out super bad, it's just you don't hear about these cases because it is almost never so dumb(the option trade this guy did is not hard to catch at all).

IIRC only Steve Cohen managed to battle back from catching an insider case.