SEC's Information Socialism Failure - NY Times Op/Ed

The SEC’s recent break up of a so-called insider trading ring made it obvious what their real goal was – to stay relevant. After getting hugely embarrassed by the feedback regarding their hedge fund minimum increase, they had to do something to make it appear they were doing something. And what better way to get headlines than by arresting a bunch of random people and calling it an insider trading ring, it’s like a real conspiracy theory!

The busts included not just a guy who had no insider knowledge but instead followed his customer’s insider traders, but two traders who started following his trades. How can they have any fiduciary responsibility or presumed to have any inside knowledge is beyond me.

A NY Times Op/Ed today points out how idiotic current Information Socialism laws are, but does not go far enough:

Insider trading encompasses the buying or selling of stocks based on non-public information about the securities in question. It is illegal to tip such information to others or to act on tips oneself. Under this definition, insider trading is so common that the only way the Securities and Exchange Commission can enforce laws against it is selectively, much as a patrolman tickets only the red sports car when everyone on the road is speeding. It may make for sexy headlines when a brazen conspiracy is uncovered, or a Martha Stewart is accused. But stopping the sports car slows traffic only for a mile or two. It gives the false impression that the policeman is on the beat, making the financial markets safe for the rest of us.