Somebody named Gary Anderson is attacking CNBC reporter/blogger John Carney for daring to doubt the wisdom of insider trading laws and thus somehow being a shill for Goldman Sachs (or something):
I have an opinion about CNBC. I believe this network comes to the aid of Goldman Sachs, other major Wall Street firms, and the insider trading syndicate. I believe that this company has an interest in luring retail investors into the investment trap that is the stock market. This is purely my opinion, but there are some tell tale signs that my opinion may be true. No one is accusing CNBC of taking money from Goldman Sachs. No one is accusing Jim Cramer, or CNBC editor John Carney (formerly of Clusterstock), or Erin Burnett of taking money from the TBTF banksters or anyone else directly.
But clearly pumping stocks while Wall Street firms are accused of churning the price of stocks through manipulation and/or insider trading is a lucrative business. ...
What's his evidence against Carney? That Carney has an opinion that the federal insider trading laws are bad public policy:
The John Carney assault on insider trading laws has stepped up just prior to and during the expert network investigations that may point to Steve Cohen, a favorite of Goldman Sachs, JP Morgan and other investment banks. I have appreciated Carney's astute observation about Basel 3 in the past, and John even quoted me once, but I noticed recently that he is speaking at hedge funds. We saw how ineffective that sort of behavior made Larry Summers, who did nothing for mainstreet as Obama's financial guru. And John considers Michael Milken a great American and Enron as being unfairly prosecuted. Sheesh!
Carney's a big boy and can--and already has--spoken up in his own defense. In particular, John points out that:
... although I do take a position against a ban on insider trading, this has nothing at all to do with my employment at CNBC. In the first place, as far as I can tell, I'm the only person at CNBC to take this view. (If there are others, I invite you to speak up!) For all I know, the brass at CNBC is slightly embarrassed by my radicalism on this issue.
More importantly, this reflects a view I've held since long before I joined CNBC. In October of 2009, I shot down every single argument I'd ever heard supporting the insider trading ban. My official Business Insider biography, which I believe I wrote back in October of 2008, explained that I believe insider trading should be legal. Way back in April of 2007, I was arguing at DealBreaker that the primary reason insider trading is illegal is too boost investor confidence because the government, corporate America and the large brokerages want ordinary investors to feel confident they are playing on something of a level playing field with those with potentially better access to information.
So we can take as established that John is being intellectually honest in holding an opinion independent of whether or not his current employer benefits thereby.
Next, is the opinion so outlandish that only someone who is a shill for Wall Street could hold it? No. In fact, the case against the federal insider trading prohibition has a long and distinguished academic pedigree. The leading spokesman for the view that John holds is Henry Manne, a long-time law professor and retired dean of the George Mason law school. Henry wrote so much on why the insider trading prohibition is a bad idea that the Liberty Fund collected his works into a volume that was edited by yours truly.
As I explained in my introduction to that volume:
Henry Manne’s 1966 book INSIDER TRADING AND THE STOCK MARKET therefore ranks among the truly seminal events in the economic analysis of law. One exaggerates only slightly to say that Manne stunned the corporate law academy by daring to propose the deregulation of insider trading. As we will see, the response by all too many traditionalist scholars was immediate and vitriolic.
Indeed, if Anderson wants to brush up on his vitriol, he should check out some of Manne's critics.
While Manne's critics are many, so too are his followers. Together, they demolished the series of incredibly bogus policy justifications offered over the years for the insider trading prohibition. John's case against insider trading stands squarely in that intellectual tradition.
As those who know my own work in the field can attest, while I vastly admire Henry Manne, I am only halfway in Henry's camp on insider trading. I agree with Henry (and thus with John) that the traditional arguments against insider trading--that it is unfair, harms investors, shakes confidence in the markets, is immoral, unhealthy, and fattening--are all bogus. I disagree with Henry, however, about the affirmative case for deregulating insider trading. More important, I have what I think is a trump card on the pro-regulation side. Indeed, John has kindly referred to that card elsewhere:
The only sensible argument I've found by someone claiming that insider trading has a victim is made by Stephen Bainbridge, who says that some insider trading is theft of intellectual property of a company. What's more, difficulties that companies would have privately enforcing intellectual property rights in financial trading markets justifies federal enforcement, Bainbridge argues.
I elaborate on that theory on my book Securities Law: Insider Trading in Foundation Press' Turning Point Series
So let's sum up. John has a long record of holding the view that the traditional arguments against insider trading are bogus. His views are well within the scope of mainstream academic discourse on the subject. He acknowledges that there is at least one good argument for prohibiting insider trading, which is the intellectually honest thing to do, while believing that that argument would lead to a prohibition that looks different than the current one (a point on which he's basically right). How that makes him a shill luring retail investors to their doom is beyond me. Instead, it makes him one of the handful of people willing to think logically about the subject instead of coming to it with knee jerk emotive reactions.
