One of the best summaries of the travesty that lead to Martha Stewart being convicted of, well, lying to avoid self-incrimination, can be found on WorldnetDaily by Samuel Blumenfeld:
Stewart was acting on information given to her. She did not build her wealth on a career of insider trading. It was a one-time fluke which involved a relatively small amount of money. When federal investigators questioned her on this transaction, she said that she had a standing order for her broker to sell the stock if the price went below $60.00. Apparently, that was the alleged lie that the jury convicted her on.
Here was the federal government, which couldn’t protect us from the terrorist attack of 9-11 in which thousands of people were killed, trying to protect us from Martha Stewart. The alleged lies she told were not told under oath. She did not commit perjury. Apparently it is now a crime to tell a falsehood to a government investigator. That’s considered an obstruction of justice.
Whatever you may think of Stewart’s action, she did not kill anyone or rob anyone. Her action did not result in anyone else losing anything. In other words, unless you believe that citizens don’t have a right to tell a falsehood to a government official in defending themselves from self-incrimination, Martha Stewart committed no crime.
Read the whole thing. The sickeningly self-righteous chortling of the predators of the wealth destroying US legal establishment just makes the whole thing worse and make it clear to me what really makes the legal world go around. If some ambitious prosecutor who thinks nothing of destroying lives and livelihoods in order to advance their own careers decides you are going to be their stepping stone, watch out. The state is not your friend.
Actually she did injure some people.
Whoever it was that bought ImClone from her.
“Pilfering Treasury property is particulary dangerous: big thieves are ruthless in punishing little thieves.” Diogenes
Yes, Martha had better information than whoever bought the stock from her, but it wasn’t a crime as the information came from her broker, not from someone inside ImClone, thus it wasn’t insider trading. In essence, Martha Stewart was convicted for lying about a transaction that wasn’t illegal.
Now that’s pretty funny. Do you really believe that getting insider information from your broker automatically makes it ok?
What’s even funnier is you actually seem to believe so-called “insider trading” is a real crime!
Machine Ghost
The government seems to believe that there was no underlying crime as it did not charge her with insider trading. So if the underlying act wasn’t a crime, why spend so much effort to convict someone for lying about it?
Why? The one unforgiveable crime is to defy regulatory officials, or, equivalently, to fail to abse oneself obsequiously before them. Bureaucrats call it “compliance”; gangsters call it “respect”; to ethologists it is “submission display”.
Martha failed to roll over and beg them to do anything they liked to her, so the response was display of power to maintain status, not proportionate punishment.
Martha’s big problem was twofold:
1. Not having her lawyer with her before the investigators came calling.
2. Cooperating with the investigators in the first place.
My own personal policy: take the Fifth any and every time some govt. flunky asks you any questions whatsoever in matters unrelated to stuff like driver’s licenses, etc.
Fuck ’em. If they have the proof, let them produce it. If not, they can get the hell out of my life.
A sound policy, Kim, very sound indeed.
A question for all you British Samizdatists acting (inexplicably) as Stewart’s apologists: How many of you have money invested in the US Stock Market? I do, and as such have a direct stake in how “Martha” (I really hate this familiarization–do we go on about “Peter”?) and her ethically challenged broker behaved. I’m with Ed, who probably also has a few dollars invested through Wall Street, which has collectively sat up and taken notice of ethical lines they may have been blurring for years as a direct result of this case. Not a bad thing, IMHO.
Oh, and one more thing: Stewart had a plea deal on the table nearly the entire time by which she could have avoided jail time and perhaps saved her empire. I respect her strength, but her overweaning pride was her downfall. The feds had no choice but to go for the jugular.
Kelli writes
. But no crime had been committed or at lease no financial markets crime. She was charged with an obstruction of justice type violation. Had she taken Kim’s advice and pleaded the fifth no case would have been brought against her. And as a long time investor in the US stockmarket I find nothing reassuring about US regulators/DA’s going after investors, celebrity or otherwise, for their own political gain. This alters the nature of the investment
far more than the rather predictable attempts at market manipulation, such as overly favorable research reports, used by the financial services industry.
If some ambitious prosecutor who thinks nothing of destroying lives and livelihoods in order to advance their own careers decides you are going to be their stepping stone, watch out.
It wasn’t until States’ Attorneys General got in on the action, with their own career enhancement as a prime motivator, that the tobacco industry finally ‘settled’ (i.e. caved in to government-backed extortion).
As for Martha and her Madmen, she lied. I have a hard time supporting a position of lying to the government. Once there, it has its legitimacy, and should be dealt with forthrightly. If it is over stepping bounds, and is acting outside its proper authority, then it may be time to take back force and overthrow it. Otherwise one should answer the questions posed honestly.
Having said that, insider trading, much like anti-trust laws, and to some extent ‘accounting fraud’ eliminates ex post facto, a basic right. They are ‘laws’ based on examining what has already transpired, all steps which were ‘legal’ every step of the way, but when added up, smelled funny, at least to the government noses. These are not ever clearly defined ‘laws’ and merely give bureaucrats the right to pick and choose who they will prosecute/persecute, and usually do when those who are the object of their desire choose not to be cowed into behaving the way the Feds want. They refuse to be extorted by threats of prosecution/persecution and are ultimately put on trial.
It always amuses me how a company can be indicted for anti-trust activities if they 1) sell higher than a competitor, 2) sell at the same price as a competitor, or 3) sell lower than a competitor. It all depends on which bureaucrat has which ax to grind on a particular day. Insider trading is merely when a bureaucrat decides someone must have known too much versus the rest of the world. What transaction has ever been conducted with both sides knowing precisely the same information? Who decides how much of a differential in knowledge is ok and when is it unfair? If there needs to be a remedy, it should be a civil suit between the seller and buyer and attacking it from a ‘fraud in fact’ that the object was sold with an impairment that, if had been known, the buyer would not have bought. Putting the State in between as a catch all ‘plaintiff’ is precisely another example of pre-emptory laws that erode markets.
This is when the ‘laws’ need to change. If they don’t, then use whatever means necessary to change them. But one still needs to answer questions with facts and not lies. The better way is to refuse to incriminate yourself, a basic right.
Ed, then you should sue whoever sells you a stock that goes down. After all, you’re buying but they’re selling. They’re getting out. Is that proof enough they intend to “hurt” you ?
The only time Martha came close to hurting me is when her driver pulled a right turn on Madison Ave. at a red light (not allowed in NYC…). I was crossing the street and got distracted enough recognizing her I almost got run over.
And I’d argue that would have been a lot more painful, consequential and costly than the pain allegedly inflicted on a few unnamed, largely hypothetical small shareholders. Who, by the way, would have been hurt exactly the the same whether Martha had been involved at all. It’s as if she was wholly responsible for the stock tanking. An FDA announcement made the stock tank. Not Martha Stewart. We didn’t even know she owned any of it until months later.
And this is why I find the self-righteous moral posturing of some of the jurors and small shareholders after the trial so disgusting. And no different from some of the former Enron shareholders who whined and moaned to the media for weeks. They are not so upset for the company or the consequences of the stock fall. They are upset that they, too, could not get out in time and sell the stock to some other anonymous fool. They are upset they were not in on the scheme.
Martha got out before them. And she’s richer. And that’s two cardinal sins. Never mind that she might be richer because she knows when to get out. And they’re poorer because they don’t. The “playing field” must be “leveled” by taking out all the conspicuous winners.
‘I want to see only one head !’
And I read today that MSO’s stock is down about 50% after the guilty verdicts (to, as one wag put it, where it was trading 3 months ago. I have no idea if that is true or not). So the government has cost investors a lot more than Martha has.
“I have a hard time supporting a position of lying to the government. Once there, it has its legitimacy, and should be dealt with forthrightly”.
“It all depends on which bureaucrat has which ax to grind on a particular day”.
These two statements cannot be reconciled,either the Government is fair and forthright or policy is executed at the whim of is minions.Government departments have quite a bit of discretion and I agree with the proposition that things get ugly when careers are at stake.
The real outcome of this will be that no high profile business people will ever again talk to the authorities without a lawyer present,so as is usual it will be the small fry who get pilloried.
Perry, I think you are overreacting and maybe not getting the whole story.
I heard Jim Comey, the incoming Deputy U.S. Attorney General talk about this subject a few weeks ago. He didn;t tlak about Martha, but he is the man who led most of the NY Stock Market anti-corruption trials over the last half decade or so. He has a long historyof prosecuting corporate crooks. He made a very straightforward case for prosecuting the likes of Martha.
1. Most of our regulation of the markets is a civil law affair. There are rules in place, you break them, the investigators come to visit, it’s just like a law suit. There aren’t any handcuffs, there isn’t the threat of jail time. Fess up, we may fine you, but that will be that.
2. The system only works because people are usually honest. They tell the truth, and cough up information that inculpates them in trading violations. Again, ding ding, pay a fine, you’re free to go.
3. When somebody fouls the works of the civil enforcement process, by lying to investigators, or coercing subordinates to lie, covering up violations, the integrity of the genteel, easy going honors system of civil enforcement, comes under attack. It becomes a lot less effective, and if it becomes widespread, removes the soft enforcement option, and forces the government to rely on the big stick – a bad result.
4. At that point the lies are told, the enforcement arm has to do something to demonstrate that you can’t get away with lying, and obstruction of justice. That’s how you get to criminal charges.
5. If you don’t prosecute the people who orchestrate coverups – which is what Martha did; the jury made it clear that her directing the subordinate to delete a naughty email from the broker showed guilty knowledge – if you fail to prosecute high mucky mucks who orchestrate coverups, then the people who invariably bring the truth to the surface will have far less reason to cooperate. Instead of being the corporate accountant who told the truth, or the honest lawyer who turned over the evidence when requested by subpoena, you will be the unemployed former accountant, or the unemployed lawyer discredited by your former boss. The lesson there is clear: don’t tell the truth to the investigators.
5. Stock market enforcers actually refer to prosecute high visibility cases because of the greater deterrent effect. With a charge of keeping the market clean, they have to think hard about where to target scarce, yes scarce, government resources. I know that the paranoid among the ranks of libertaria think the U.S. government has infinite resources allowing it to pick on poor l’il ol; billionaires like Martha, but that simply isn’t true and any lawyer who has litigated against the government – especially the big firm guys like Martha’s counsel from Wachtel Lipton -will tell you that.
6. The reason this is a good thing, is that the Country Club set that the SEC usually goes after has sophisticated counsel, so it’s not government “picking on the little guy;” and the Country Club set, unlike the bag’o’crack and a 9 mil set, are actually deterred by embarassing public spectacles; and the threat of losing one’s company, social standing, and a substantial chunk of change is enough to keep executives (who would otherwise be tempted to cheat) on the straight and narrow.
With some money in the markets, and having worked enforcement and defense side as an attorney (though not in the markets) I tend to agree with Comey. The integrity of the market, and the integrity of the honor system underlying the civil enforcement regime is incredibly important. Even if the charges were kiind of chickenshit, they sent a clear message: be honest, or there will be hell to pay. Please note also one counterintuitive point: people at thousands of corporations around the country will look on this example, and play it straight with their broker, and if the regulators come by to talk about some odd stock transaction patterns that have been noticed. It didn’t take a huge crackdown on hundreds of little guys, it took one high visibility crackdown on one person, who knew she was caught with her hand in the cookie jar.
As for perjury & obstruction of justice charges, DOJ prosecuted around 2000 instances last year, where the person prosecuted was not charged with a substantive crime, but merely lying to investigators to cover up an existing crime. Here, Bacanovic was convicted of the insider trading charges.
As to the wisdom of insider trading charges – well, between having them or not, I’d rather have them. Company execs, and the major investors who can steer companies through their 15% – 20% investment, need to be held to a higher standard so as to avoid being able to take advantage of smaller investors. If the big boys and insiders can force the company into stupid, risky ventures, they shouldn’t also have the right to bail out early, and leave smaller investors to suffer the hit when the stock drops in value.
As for the guy above who suggested the little guys should just sue – well, duh! The problem is, the little guys can only sue on an insider trading theory or something like it(Rule 10, 14, 16) or on a breach of fiduciary duty theory – which is even squishier.
Hmmm.
“What’s even funnier is you actually seem to believe so-called “insider trading” is a real crime!”
I’d suggest that you do some reading. Specifically the time period of the great robber barons. They were called this partially because they were able to baldly manipulate the stock market for their own gain.
The amount of damage done to small investors during this time period was horrific. Which is why the SEC was created to oppose that behavior and bring stability and accountability to the markets.
Without that stability and accountability the markets would largely dry up and die. And with it would go a major source of investment capital for startup and established companies. A drain of capital that would definitely result in massive economic dislocations.
Al Maviva explained the law half of it, so I don’t have to. His was a long post, but it was very much worth reading. It would be very easy to return to the days of the Robber Barons, as ed mentioned.
From an economics/ freedom of contract standpoint this was a good decision. The capital markets are a force for growth in the United States, one of the most powerful competetive advantages we have. There are companies from other nations that bring their securities to market here and in London because their home countries do not regulate the markets enough. Yes, enough.
Strong market regulation is strongly correlated with capital accumulation, wealth generation, and successful entrepreneurial activity. Market buyers and sellers are anonymous. You cannot build up a reputation for being honest, because no one ever knows that you are the one they are buying from. For the system to work then the buyers have to trust the system itself – and that only happens when there is strong regulation.
The alternative to capital markets to accumulate capital is bank financing. That’s the route Japan went. Hmmmm…. doesn’t seem to be working out real well. There are a limited number of banks, they have limited resources to do research and investing. No. It doesn’t work anywhere near as well as the Western world’s capital markets system.
Libertarians should be concerned with freedom of contract, and freedom of contract is absolutely impossible in the face of systemic fraud. No one would ever enter into a contract if they could not tell fraudsters from the honest sellers. No capital would accumulate. No weath to start-ups. Small companies with great ideas would die on the vine without access to capital.
And it’s all based on trust. Trust in the system. Trust that the other person isn’t lying. Without that, equity culture comes to a halt.
“I have a hard time supporting a position of lying to the government. Once there, it has its legitimacy, and should be dealt with forthrightly”.
“It all depends on which bureaucrat has which ax to grind on a particular day”.
These two statements cannot be reconciled,either the Government is fair and forthright or policy is executed at the whim of is minions.
Certainly it can be reconciled. Either I am taking up arms against my government or I am complying with it. It may operate outside the bounds I feel is proper, but as long as I am not revolting against it, it is the legitimate government to which I am responsible to not lie to. I have the right not to incriminate myself, which is a valuable right to have. When I am firmly convinced that the government is operating wholly outside of its bounds then I will work actively against it, in which case I am not obligated to it all. I can certainly believe that the government (at least in the US) is very near that point, and will be even more so in the future as it endeavors to make good on its unfunded promises. The tactics it will have to resort to may well be more than can be tolerated. A day may come when I feel the need to rebel against a wholly corrupt government, until then, if my government asks me a question, I either answer it truthfully or plead the 5th.
“Certainly it can be reconciled. Either I am taking up arms against my government or I am complying with it”.
That is not reconciling the question that is two completely opposing standpoints.
One does not have to be up in arms against the Government there are many shades of disagreement and it is alway worth questioning the Goverment’s officials,they are people,people make mistakes or have an agenda.
The only correct way to deal with this is for all officials to read the interviewee their rights,the police have to. As it stands the procedure is open to abuse leading questions asked, words put into mouths, an informal interview later going on the record.
No one is advocating lying to the Government but it is madness to answer questions without taking advice first.
Al Maviva: “It didn’t take a huge crackdown on hundreds of little guys, it took one high visibility crackdown on one person, who knew she was caught with her hand in the cookie jar.”
Precisely my point. Just like the disrespectful pen-owner in Casino.
Ed wrote “Actually she did injure some people.
Whoever it was that bought ImClone from her.”
“Do you really believe that getting insider information from your broker automatically makes it ok?”
Under current US law, it’s perfectly legal to sell a stock if your broker says “We hear that the CEO is selling”. That is not legally classed as insider information.
Secondly, you are not “hurt” by the seller if you buy a stock that subsequently goes down. You are worse off, certainly, but that is the result of your voluntarily made decision to buy, not the other person’s decision to sell. The buyer in this case would have bought the shares anyway – they would have lost just as much money if they had bought from an uninformed seller as from an informed one. So, given that the buyer would have lost money regardless of Stewart’s actions, it is logically impossible for their loss to be ascribed to Stewart’s stock sale. The responsibility clearly lies with the decision to buy.
In addition, the charge that the buyer was hurt is even more ludicrous in this case, because it was widespread knowledge in the market that FDA approval for Erbitux was coming up, and there was a well-known rumour that approval would not be granted. Hence why the stock was trading down on huge volume. There cannot have been a single buyer in that stock who was not aware of the large risk of nonapproval. Even CNBC caught on to the story.
Finally, if Stewart had not sold her shares, then the person who bought from her would simply have bought from someone else, and may have had to pay an extra cent or two to do so. So they would actually have done *worse* if Stewart had not sold. In this situation, Stewart actually saved them money and helped, not hurt, the buyer.
As for the charges she was actually convicted on – fact is, she did try to obstruct a legal investigation. If she had lied, altered emails etc, and *had* committed fraud or some other financial crime, then presumably we would all agree that was criminal obstruction of justice?
So, the question is, does obstruction of justice become a non-crime, if the thing being “obstructed” is not actually a crime, but legal behaviour? Is it ok to try to stop the government checking up on something which is actually non-criminal, but which they suspect may be criminal, and to prevent them by duplicitous means?
I would compare it to the police coming round and asking you questions about a fraud at your company. You didn’t do anything wrong, but you decide to lie to and mislead them. Should that be a crime?
I have some sympathy for the view that this could be classed as criminal. You are after all trying to wilfully mislead the legal process. Remember, even in an anarchist society, there would be a common law legal process. So this is *nothing* to do with the government or libertarianism at all. It is to do with process of law. However, I would view this as a “slap on the wrist” offence, in the event that the lie was about a non-crime, as was the case with Stewart. An appropriate punishment would be a fine or community service. Allowing her to rejoin the company without jailtime would save MSO shareholders a fortune. Jailing her would destroy jobs and wealth, as well as being grossly disproportionate to the harm her actions caused.
Finally I must respond to another clueless post by Kelli:
“A question for all you British Samizdatists acting (inexplicably) as Stewart’s apologists: How many of you have money invested in the US Stock Market? I do, and as such have a direct stake in how “Martha” (I really hate this familiarization–do we go on about “Peter”?) and her ethically challenged broker behaved.”
Whether or not someone is invested in the US stockmarket is irrelevant, although as it happens I have had large sums in that market for almost a decade. Once again – Stewart’s stock sale was perfectly legal. It is not insider trading, under US law, to act on a broker tip that insiders are bailing out of a stock. That is all Stewart did. She did not get the tip from Sam Waksal or any Imclone insider – she got it from her brokerage firm i.e. it was common market knowledge. If a brokerage firm is telling its customers something, then by definition it cannot be insider information as the information is now out in the market and common knowledge. Now of course people like youself will not hear about this until much later. But that is because you are not putting in the required time, money and effort to get up to date market information. You are being outcompeted by smarter, faster acting investors and traders, not done over by some insider trading cabal.
Secondly, even if no insider had sold a single share of Imclone stock before the FDA decision, Imclone shareholders would have lost *exactly the same*. It was the failure to get Erbitux approval from the FDA that drove down the price – a serious change for the worse in the fundamentals of the company. That would have an identical impact, regardless of who bought and sold before the decision.
So, you would lose exactly the same regardless of any insider trading, and Stewart did not in any case trade on insider information. Your accusations are lacking in any understanding of the facts or the law in this case.
Ed:
“I’d suggest that you do some reading. Specifically the time period of the great robber barons. They were called this partially because they were able to baldly manipulate the stock market for their own gain.
The amount of damage done to small investors during this time period was horrific. Which is why the SEC was created to oppose that behavior and bring stability and accountability to the markets.”
No amount of alleged damage done by “insider dealing” will ever compare to the human damage done by the Great Depression – itself a product of the same Federal Government that created the SEC.
I agree with Kim du Toit above: Martha Stewart should have taken the Fifth Amendment and told investigators to butt out. She has not been convicted of insider trading, but on not fully fessing up to the Feds. I find the jail term for this excessive. It smacks of legal grandstanding by ambitious lawyers trying to get famous.
Insider trading as a concept is a mess, and as bad as anti-trust. Of course different stock exchanges and legal jurisdictions should be allowed to experiment with different definitions of what is insider trading, if they can. A process of evolution in legal theory and practice might eventually get us to a saner system.
“I’d suggest that you do some reading. Specifically the time period of the great robber barons.”
Yep, and while you’re reading that, take note of the price of petroleum products during the heydey of Standard Oil. You’ll find it trending steadily downward.
“They were called this partially because they were able to baldly manipulate the stock market for their own gain.
The amount of damage done to small investors during this time period was horrific. Which is why the SEC was created to oppose that behavior and bring stability and accountability to the markets.”
I suppose that’s why the stock market kept trending upwards until 1929, quite a long while after the “robber barons” supposedly inflicted such damage?
“Al Maviva explained the law half of it, so I don’t have to. His was a long post, but it was very much worth reading. It would be very easy to return to the days of the Robber Barons, as ed mentioned.”
How I wish we would!
Ed, speaking of doing some more reading. The robber barrons ruled in the last quarter of the 19th century, and this period of unprecedented wealth creation gave us the Sherman Antitrust Act, not the SEC. The latter came about 40 years later in 1934 as a result of the Depression. You might want to get some basic facts straight before you tell others to read more….
And you might also want to look into what the so-called robber barons also created. What their money was spent on. And how many others got rich riding their coattails.
As for your predictable reasoning, it is as illogical as it is circular. If robber barons make markets “dry up” – I think you mean liquidity – then they cannot profit from it. If they are the only buyers and sellers around, who can they sell to but themselves ? How can they possibly make money ? It makes no sense whatsoever, like most of the conventional wisdom on that period.
But then it’s probably simpler to repeat that good old comfortable, conventional wisdom. “We” called them robbers therefore it must be true and they were guilty.
sigh.
1. Under current US law, it’s perfectly legal to sell a stock if your broker says “We hear that the CEO is selling”. That is not legally classed as insider information.
That’s a surprise. Especially since any number of people have been imprisoned for similar offenses. Perhaps you should reconsider and take into account that her stockbroker was in cahoots with Sam Waksal.
2. No amount of alleged damage done by “insider dealing” will ever compare to the human damage done by the Great Depression – itself a product of the same Federal Government that created the SEC.
The Great Depression came about because of an excess of easy credit. People bought everything on credit, along with stocks. This cause a massive overinflation of stock market values which, when it finally “corrected”, resulted in the crash.
The government really didn’t have all that much to do with it.
3. Secondly, you are not “hurt” by the seller if you buy a stock that subsequently goes down.
You are not *legally* hurt if the stock goes down. You are legally hurt if the seller sold because of insider trading.
4. There cannot have been a single buyer in that stock who was not aware of the large risk of nonapproval.
And this means nothing whatsoever. The primary principle, however often it is violated, is the concept of the even playing field.
5. She did not get the tip from Sam Waksal or any Imclone insider – she got it from her brokerage firm i.e. it was common market knowledge.
Umm. How could it be considered common market knowledge if the only people who knew it were the insiders and Martha’s broker? Isn’t that the classic description of insider trading?
6. (ed: “I’d suggest that you do some reading. Specifically the time period of the great robber barons.”)
Ken: Yep, and while you’re reading that, take note of the price of petroleum products during the heydey of Standard Oil. You’ll find it trending steadily downward.
And this means what? While the price of said products may have been dropping, Standard Oil was broken up simply because it was continuing to manipulate prices and availability. I.e. the prices weren’t dropping as fast, or as far, as they should have been. Saying the prices were dropping is a meaningless statement.
7. (ed: “The amount of damage done to small investors during this time period was horrific. Which is why the SEC was created to oppose that behavior and bring stability and accountability to the markets.”)
Ken: “I suppose that’s why the stock market kept trending upwards until 1929, quite a long while after the “robber barons” supposedly inflicted such damage?”
No. The stock market went up because of easy credit, huge margins allowed (buying stock on credit) and vastly overinflated valuations of stocks.
8. “Ed, speaking of doing some more reading. The robber barrons ruled in the last quarter of the 19th century, and this period of unprecedented wealth creation gave us the Sherman Antitrust Act, not the SEC. The latter came about 40 years later in 1934 as a result of the Depression. You might want to get some basic facts straight before you tell others to read more….”
sigh. The Robber Barons didn’t just operate in the 19th century. You’re thinking about the ones associated mostly with *railroads*. The fact is that they continued to operate well into the 20th century. The names changed but the tactics and the tecnhniques were exactly the same. That’s why they’re called Robber Barons.
Does it also help to know that the term Robber Baron was coined in 1934? And that the most identified Robber Barons lived anywhere form 1865-1937? I.e. they were active in the first quarter of the 20th century too. Which makes sense after all. They didn’t suddenly all die on Jan 1, 1900.
I sure hope it does.
9. And you might also want to look into what the so-called robber barons also created. What their money was spent on. And how many others got rich riding their coattails.
And you might also want to take a close look at the people who got crushed, shot, maimed and beaten along the way. I suppose it’s admirable, if you are imagining yourself as profiting from such behavior, but I seriously doubt that.
10. If robber barons make markets “dry up” – I think you mean liquidity – then they cannot profit from it.
Let’s try it this again. A common method was the older equivalent of a “pump and dump”. During this time period stock manipulators would invest heavily into a stock, driving it’s price up madly. This would lure other investors into this stock, along with carefully planted newspaper stories about false fiscal health of the stock. Then the manipulators would dump all the stock and let others take the fall.
They were able to do this because there weren’t any real regulatory controls. Investors didn’t have alternative or independent sources of information and what sources they did have were corrupted and contaminated. Nor could the company’s books be believed because a common technique was to artificially inflate the sales/production of the company by issuing false documentation.
Ed, you are a total dolt.
– Martha was not an insider. And Imclone’s stock did not go down because of insider trading. The insiders were getting out to avoid being hurt like everyone else due to a government decision. Get a clue. Martha was accused of lying about committing a crime she was never charged of, and could not be charged of, since she was not an insider. It’s nice to know you think people should be jailed because they committed a crime they can’t legally be accused of. Obviously, being richer than yourself *and* trying to get even richer is criminal in your view. Never mind that you are accusing someone worth hundreds of millions to hurt you because she saved herself $50k.
– “Perhaps you should reconsider and take into account that her stockbroker was in cahoots with Sam Waksal.” So she is responsible for who her broker is in “cahoots with” ? She has to pay for what her broker and Waksal did ? And what American law sanctions this exactly ?
– “You are legally hurt if the seller sold because of insider trading.” No. You are not “legally hurt”. Read the law.
– “And this means nothing whatsoever. The primary principle, however often it is violated, is the concept of the even playing field. ” So anybody who gets out before you is a crook ? There is no “primary principle” or concept of a “level playing field”. I doubt your pontificating spewage impresses anyone.
– “Umm. How could it be considered common market knowledge if the only people who knew it were the insiders and Martha’s broker? Isn’t that the classic description of insider trading?” Er, no. Insiders are like, inside the company….Do you know what “inside” means ? So Martha S. would not be an insider. Which is why she was neither indicted nor convicted on those grounds. Hellooooooo ? McFly ? Anybody home ? If it was insider trading, why wasn’t she convicted of insider trading ? Genius.
– “Saying the prices were dropping is a meaningless statement.” Only because you have no idea what you’re talking about, or what the commenter is referring to. Nice of you to admit your ignorance.
– “No. The stock market went up because of easy credit, huge margins allowed (buying stock on credit) and vastly overinflated valuations of stocks.” The last one is the best. The stock market went up because stocks went up. LOL. Thank you Captain Obvious. We should make stock price increases illegal, uh ? As for margin debt, it is by definition temporary and therefore cannot be accused of somehow “forcing” markets up. Ever heard of margin calls ? Do they make markets go up ?
– The SEC had nothing to do with robber barons, and neither did the Depression. stop blabbing about “tactics and techniques” you know nothing about.
“Robber baron” was not invented in 1934 – as if that proved anything in the first place – and the dictionary defines them as late 19th century “American capitalists”. Just so you know, the first use of the term was by economist Mathew Josephson in 1878. He used it to describe the big business leaders of his time. As to where you learned that bit of nonsense, who knows. Probably everywhere else you learned the other nonsense you repeat.
And I have news for you : they didn’t die in 1900. Or in 1937. Or even in 2003. “Robber barons” still exist, little man. Except nobody cares anymore because the government is a rather much larger robber and a bigger baron any of these guys ever will be.
– “And you might also want to take a close look at the people who got crushed, shot, maimed and beaten along the way. ” Sounds like you’re talking about the Chinese Maoists. Or Stalin’s Communists. The Khmers maybe ? The Nazis ? Franco ? Mussolini ? Oh no. You’re talking about the really evil people. America’s evil capitalists. Right….
– “Let’s try it this again.” Yes. Let’s try that again. Dummy. If I am the only or sole buyer and I buy my own stock to the sky, my own massive selling will drive it all the way back down. In other words, I will not make a cent. If your simplistic description was true then all hedge funds would be playing penny stocks in the OTC market. They don’t. They can’t. It’s not anymore profitable to them than it was for the “robber barons”. You say it yourself: they needed people to absorb their supply. Who were adult, responsible, seeking a profit and who also well knew, back then, who was behind the action.
– “Investors didn’t have alternative or independent sources of information and what sources they did have were corrupted and contaminated.” Oh sure. Nobody knew. I mean, “Reminiscences of a Stock Operator” was published in 1923 and it was already old news at the time. By the way, news are every bit as “corrupted and contaminated” today. It’s not any easier to make money and it still has nothing to do with the cleanliness of the news. It’s not the news but which news and what others will make of them.
– “Nor could the company’s books be believed because a common technique was to artificially inflate the sales/production of the company by issuing false documentation.” Sounds like Enron, Worldcom, Adelphia, Tyco….You’re right, the SEC has made a huge difference. That’s why we needed one.
Interestingly, none of these companies have anything to do with Martha Stewart’s. You’re not accusing her of false accounting, are you ?
Out and over.
You’re right about one thing though. People like you are doomed to be hurt in the stockmarket. They’re too dumb. And no, the “playing field” should be leveled down to your level.
Rober Barron was the title of a book published in 1934 by Matthew Josephson. He claims in his book that the term dates back to the 1880’s and was used by Kansas farmers to describe the railroad companies of the time. There’s some dispute about its exact origin, and web searches on the term are inconclusive (with wikipedia apparently having the best info). The term was coined to be pejorative, and has been taught to generations of school children.
Did the robber barons create the US as a world power? Or siphon of the wealth that would have been created anyway helping to set the stage for the great depression? I’ll not get into that fray because it is an even less well settled question than the origins of the term. Arguments can be made on both sides, and in the fullness of time, I suspect that both sides will be shown to be partially right.
Until we reach the fullness of time, expect to see attempts to rehabilitate the reputations of the capitalists that built huge monopolies pop up every couple of decades as the new generations of monopolists mature. Expect also to have them trotted out as examples of why the new generation should also be reigned in. Don’t expect a simple blog post to really change the dynamic here. this country has become great, imho, due to the constant push/pull in the balance between great concentration of wealth and great dispersal of weath. I personally think either extreme is bad, as would be a stagnant, unchanging middle ground where things are kept in perfect balance. The swinging of the pendulum is likely the best possible results. Too much wealth in too few hands and we’re all slaves. All people being equal and there’s no incentive to innovate.
If people do have better references to the origin of the term, I’d love to see them. Everybody has an ‘oral history’ to tell on the topic, but few have references to original sources to back up their conjectures.