The cover of TIME magazine in
the February 13th issue reads: “This man is busting Wall St.” The
article tells the story of US attorney Preet Bharara. Preet puts law violators
in Wall Street behind bars. Most of his focus has come from listening and
recording conference calls where many times information is shared illegally
between corporations, like hedge funds. This has led to the arrest of 63 people
on insider-trading and other stock-fraud charges. It’s impressive that he has
had 56 convictions, of which 7 are pending, and he has had no losses. One of
his goals is to finish Wall Street’s culture of greed and allow equal
competition.
The down side of the coin is
that the notion of inside trading is
not clear at all, “Neither the SEC nor Congress has ever defined inside information, nor has either
succeeded in specifying the level of significance the information must have to
be the subject of a criminal violation” said Henry G. Manne, a dean emeritus of
the George Mason University School of Law. I wonder the impact that this has on
privacy and condemning employees that are innocent. I’ve heard so far too many
cases of governments sneaking into people’s lives and corporations’ affairs. Nowadays
is not about violating the law but about avoiding any appearance of violation.
A simple joke over the phone or in an airport can be considered as a threat if it’s
wrongly interpreted. The article highlights the fear that many executives have to
pick-up the phone knowing that someone might be listening. For people whose affairs
are conducted honestly, it’s very uncomfortable and contra-productive. It
limits freedom of expression.
But not all is negative. The
outcome of Bharara’s investigations has had very positive results in Wall St.
After all, the financial crisis of 2008-2009 was caused by the financial system
along with some wrong decisions from the government itself. The article tells
the story of Bharara accusing Dan DeVore, a former global supply manager of
DELL who sold information on sales, forecasts and future pricing of DELL
computers to Adondakis of Level Global for a sum of $145,000 paid by PGR. There
are crimes that are more obvious than others but this one doesn’t require half
of an eye to notice.
The work done by Bharara provides
an external and strong incentive for Wall Street professionals to be ethical in
their dealings. About my point made two paragraphs above, to detect violators
in Wall Street has more weight than potential privacy issues. The things that
happen in Wall St., as we learn from history, have an awfully big impact, for
good or bad, in the whole World.
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