Sensible Erection | SEC charges billionaire Dallas brothers with insider trading

Friday, 30 July 2010

SEC charges billionaire Dallas brothers with insider trading

quote [ Sam and Charles Wyly, Dallas billionaire investors known for their support of conservative candidates and causes, made $550 million in undisclosed profits through 13 years of insider trading, according to a Securities and Exchange Commission lawsuit filed Thursday. ]

One of the American ways to riches. Thumb is Wiley Coyote (guy's name is Wyly).
Edit to add: Facebook data on 100 million people leaked-- see extended

This should be a new post but I'm out of post options for 24 hours -- maybe someone else can do it:

Researcher 'leaks' 100 million Facebook IDs:

http://www.tgdaily.com/security-features/50859-researcher-leaks-100-million-facebook-ids

Torrent: http://thepiratebay.org/torrent/5722635/Facebook_directory_-_personal_details_for_100_million_users

Proposed thumb (maybe NSFW): http://i28.tinypic.com/nd0x8x.jpg from here: http://synthesis.net/2008/08/28/facebook-the-movie/

Problem I have with Facebook is I never know for sure who's linked to whom and how and what anyone else can see. So why bother?

[by maryyugo@5:02pmGMT] [+4 Good]

Comments

Didel said @ 5:12pm GMT on 30th Jul
What I've always wondered about it the need to increase already extravagant wealth. I think if I had a few million dollars I'd be happy with the amount of wealth I had, never mind if I had a 100 million or more. If that was the case I'd definitely retire, so what drives people like this to continue to try and increase their wealth? I can understand if they have companies they've started or put a lot of their time and life into, and they have an emotional as well as financial bond to see the company do well, but what about investors like this, who I would argue have very little attachment to companies and simply want to increase their already outrageous wealth?

maryyugo said @ 5:25pm GMT on 30th Jul
People go to extremes and do a lot of things that don't seem to make sense. The root of such things is probably somewhere in evolution and eventually will be figured out. Human minds do lots of strange things when relieved from their primal need to simply survive, find food, and mate.

ComposerNate said @ 6:11pm GMT on 30th Jul
Some of us have a drive, the most contagious being those without end: wealth/power accumulation, ability at sport/chess/musical instrument, worshiping God, building a business, etc.

It literally provides life purpose.

Chop-Logik said @ 7:01pm GMT on 30th Jul
As Calvin once said of tracking his bubblegum chews-per-minute, "If my numbers go up, I'm having more fun!"

MMORPG said @ 3:06pm GMT on 31st Jul
He sure was right!

wottan said @ 7:33pm GMT on 30th Jul
I think it's relatively simple. Money is basically the most fundamental status symbol in the world and one of the most common methods of keeping score between people. Nothing else is really as explicitly valued across the world. Once you get into the money as the primary measure of your success game, I imagine it is quite hard to get out of it.

cb361 said @ 8:09pm GMT on 30th Jul
Yay! July 30th. It's payday.

-_- said @ 5:00pm GMT on 31st Jul [Score:1 Insightful]
It's a game.
Some people just find they have a knack for identifying/exploiting opportunities that result in a profit and it becomes a source of personal satisfaction/justification for them that can be as addictive as anything else that does as such.
It's very easy to get caught up in such a feedback loop.

We're born, stumble around confused for a while, then die.
Most human endeavors boil down to just being games we play to fill the time.
Yes, arguably, most human endeavors boil down to the pursuit of power/security and/or sex (depending on whether you're listening to Shakespeare or Nietzsche) ... but in the end even power and sex are just games we play to fill the time.
Life, if one thinks over much about it, can be quite scary/confusing/purposeless so we readily adopt whichever distractions work best for us.
To this way of thinking these brothers are not much different from Gandhi, a serial killer, or a devoted father ... they's hooked on something that makes them feel "special".
And that's .. okay.

But they cheated at the game they were playing and they got caught .. there will be repercussions.
"Do as you wish, let that be the whole of the law" ... but remember, your actions will have consequences.

flat_michael said @ 6:03am GMT on 1st Aug
GREED

swiggy said @ 5:15pm GMT on 30th Jul [Score:1 Funny]

maryyugo said @ 5:32pm GMT on 30th Jul
Sounds like the offspring of an unchaste pairing of Wiley Coyote and Elmer Fudd.

Wile E. said @ 5:45pm GMT on 30th Jul [Score:1 Underrated]
Ahem. My name is actually "Wile E. Coyote," super genius.

My card:

Dioxin said @ 11:22pm GMT on 30th Jul
Thanks for pointing that out. Mary's thumb got me all confused about who was referencing who.

f00m@nB@r said @ 6:17am GMT on 31st Jul
that was one of my very first X11 wallpapers.

Nihil said @ 3:07pm GMT on 31st Jul
Which are different from regular wallpapers because...?

f00m@nB@r said @ 12:55am GMT on 1st Aug
It is blessed by RMS.

sanepride said @ 5:44pm GMT on 30th Jul [Score:2]
These scumbags also happened to be major financial backers of the infamous 2004 'Swift Boat' agitprop campaign against John Kerry. They are huge Republican/right-wing contributors.
That they are apparently also crooks seems appropriate. No doubt they will attempt to equate their legal issues with political persecution.

clumsy_juggler said @ 8:51pm GMT on 30th Jul
I thought it was the traditional right of the winning side to persecute the losing side in the USA.

Krutz said @ 9:19pm GMT on 30th Jul
Only among those who equate "losing an election" or "having their worldview brought down by reality" with "persecution."

todde said @ 2:27am GMT on 31st Jul
Only Republicans. The Democrats don't have the cojones.

theolypse said @ 8:14pm GMT on 30th Jul
This is happening because lazy, bribed-out government regulators can't possibly catch those wily rich bastards.

Now it's your turn.

anagramophone said @ 9:34pm GMT on 30th Jul

anagramophone said @ 9:35pm GMT on 30th Jul

pel said @ 10:44pm GMT on 30th Jul
Christ, what an asshole...s.

Nihil said @ 12:16am GMT on 31st Jul
It seems that the trouble here came from those folks cooking the books, not simply using insider knowledge.

What are the reasons why insider trading should be illegal? Selling and buying goods based on information I have, while the counterpart doesn't, happens every day when trading pretty much anything that isn't stocks - real estate, collectibles, industrial infrastructure, etc.

For example, if I have insider information that a revolutionary advance in solar panel technology is forthcoming, why is it legal for me to buy a ton of solar panel parts, but not to buy stocks in the company that makes them?

Wikipedia offers a good summary of the arguments for legalisation, but nothing on counter-arguments.

Krutz said @ 12:44am GMT on 31st Jul [Score:1 Insightful]
The main reason is that the market is supposed to have a certain level of transparency. That is, you and I have the same access to the same information, should we seek it out. Our "skill" as investors is then supposedly what determines how well we do in the market.

If I or other investors discover that others have access to privileged information before it becomes public, then why should we invest? If we're just going to be out-maneuvered and see our investments potentially fail because we can't get the same info, then there's less reason to put money into the market.

In essence, investing is already hard enough to do successfully, so why would anyone want to play if the deck were stacked in favor of others?

Milkman666 said @ 1:22am GMT on 31st Jul [Score:3 Insightful]
Gotcha, they don't want to scare away the marks.

Krutz said @ 5:58am GMT on 31st Jul
Yeah. I'm kind of surprised that brokers don't offer their clientele free drinks and tickets to a magic show.

willrogers said @ 5:27am GMT on 31st Jul [Score:1 Informative]
It's only insider trading if you got the information from someone inside the company whose stock you are buying/selling/etc.

The point is that insiders of a company have their trading of their company's stock restricted by certain SEC rules. This usually includes things like restricting the time and rate they can trade their shares of the stock.

This is meant to prevent insiders from gaming the system and doing things like falsely inflating their companies assets by cooking the books so that the share prices artificially and then selling all their stock before the share price crashes and the outsiders are left holding the bags.

Insider trading extends to outsiders that have been given inside information so that insiders can't use outsiders from making an end run around the rules for insiders.

E.g. an insider might be able to cook the books but SEC rules would prevent him from being able to trade on his company's stock in time to profit from it. If insider trading rules didn't exist, he could just get his friend to buy shares for both of them before he cooks the books to jack up the price and then sell the stock before anyone finds out that the stock is worthless.

Even without any nefarious fraud, there are still problems that insider trading laws protect against. An employee might know that there is some problem with his company and/or its product, like a major recall or a pending federal indictment, which would tank the share price and cause losses for all shareholders. The employee is usually prevented from trading his own shares, but he could warn his friends that are invested in the company to get out and save their money, but every other shareholder who isn't his friend wouldn't have access to this information and would lose their money.

The only people who would have access to this information before the public at large would have any way of knowing about it are insiders and whoever they choose to tell. Thus, the insider and his circle have an unfair advantage on everyone else and are able to save their money while everyone else loses out. This is what happened with Martha Stewart and it's the reason she went to jail.

This is one aspect of it, but the more sinister and problematic issue is someone using this same negative inside information to make money by shorting the stock. The insider's friends would know that the company stock is going to tank from this legitimate problem and therefore would short sell the company's stock (selling borrowed shares bought on margin at a peak price and buying new shares at rock bottom prices to replace them) to make a hefty profit. Just think of the climax of the movie "Trading Places."

And it gets even worse because someone with inside information could use even slightly bad information to severely tank a company's stock. They could spread rumors to business journalists that this minor bad news is just foreshadowing an even worse situation for the company in the near future. This would tank the stock that they're short selling even though the company is healthy and the bad news really isn't a threat to its business.

But to sum it all up, insider trading rules are there to prevent you from using information you shouldn't have and prevent people that should have it from being able to unfairly profit from it.