Of all the crimes Enron executives have been charged with, insider trading is the only crime I can see myself committing because I believe, as the kids used to say, information wants to be free. Thus, I don’t think insider trading should be a crime at all. It seems logical that if your broker knows something other brokers don’t know, you would pay him handsomely to trade on that information. If you work hard to learn what is going on in a company, you should get the benefit of that, and should be able to trade on it.
Ken Rice traded on information that Skilling was leaving the company and I am a-okay with that. Good for Ken. That was smart. What was he supposed to do, sit there and watch his stock tank when he had the means to prevent it?
And I’m consistent about this. Sherron Watkins’ insider trades are also cool with me. What bothers me is that right now it is against the law, she violated the law, was never punished for it, and she has the audacity to make a living telling everyone else how to be ethical. It’s the hypocrisy I can’t stand – and the veneration of the media.
So I’m down with insider trading. I think insider trading is probably how the markets are supposed to work. However, I accept that investors might think it’s unfair because they don’t have the same opportunity to make money on the same information that insiders have. But if they did the work to find out what was going on, or if they used a broker who offered the competitive advantage of knowing what was going on in your companies, they’d be singing a different tune.
In the Smartest Guys music video someone (maybe Amanda Martin?) says that “anyone could get into the market.” This always struck me as an incredibly elitist thing to say. Of course anyone can get into the market! But the market, like life, is not fair. There’s no affirmative action program for stupid people. You don’t get points for being good-hearted. You have to know what you’re doing and if you don’t, it’s your own stupid fault.
That being said, most of the executives charged with insider trading have much more respect for the market than I do and would never actually trade on insider information.
One Enron executive told me the mere idea of insider trading was “abhorrent” to him. I argued about that, stating that when people trade on insider information, they’re actually using the competitive advantage that is so valued everywhere else in business. He was shocked that I’d say such a thing, and I went even further, stating that when an executive trades on insider information, he is rewarded for it, like a bonus on his intelligence, whereas those who don’t have the information can look at it like a tax on being out of the loop.
He was perplexed by my attitude about it and said I’d make a good viking queen – a compliment so far never matched.