
Carl Icahn dumps $31M in steel-related stocks before White House tariff talks - blondie9x
http://www.latimes.com/business/la-fi-carl-icahn-trump-tariffs-20180302-story.html
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bertjk
Title should say "steel-related stocks", not "steel stocks". Steel companies
are doing great as a result of the news. The stocks he dumped were for those
companies whose business depended heavily on cheap steel supplies.

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lambdasquirrel
There’s a lot of this that reeks of the Great Leap Forward, e.g. when Mao had
the peasants kill sparrows because they ate grain seed after plantings. The
U.S. economy may be more resilient than post-war China’s... but one can’t help
but wonder how this will turn out.

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tdeck
Mao also had people melt down their woks to produce "backyard steel".
Predictably the result was unusable and everyone was out a wok.
[https://en.wikipedia.org/wiki/Backyard_furnace?wprov=sfla1](https://en.wikipedia.org/wiki/Backyard_furnace?wprov=sfla1)

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ghufran_syed
This isn't really meaningful unless we know what proportion this is of his
portfolio, what other trades he did over the last year, and what other
positions he still has - all of which the SEC has access to. So I'll believe
it when there is an actual court case

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sehugg
Not the first time he's been accused: [http://www.latimes.com/business/la-fi-
icahn-insider-trading-...](http://www.latimes.com/business/la-fi-icahn-
insider-trading-20170509-story.html)

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cyphunk
that is a year old. I'd be curious the result of that accusation. I'm happy to
prove Icahn is an evil __whatever__ but also it's a good chance to calibrate
my desire to avoid silly liberal witch hunts, which as a self-identified
libtard I have sometimes mistakenly joined.

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curiousgal
Didn't Martha Stewart go to prison over something like that?

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mikestew
To summarize, Martha Stewart went to prison for lying to Federal authorities.
[0] Securities fraud was not part of what she was found guilty of, AFAIK. I
dunno, much like someone here said about Icahn, you think she's risking prison
for a loss of less than $50K? I don't have nearly her money, and I wouldn't.

[0]
[https://en.wikipedia.org/wiki/Martha_Stewart#Sentence](https://en.wikipedia.org/wiki/Martha_Stewart#Sentence)

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joe_the_user
Icahn, unlike Stewart, is a professional stock speculator. There's every
reason to think a speculator makes their money "running their connections".

Moreover, if anything, Stewart's manifestly unfair and abusive case shows
prosecutors choose their examples based not on how dirty the target is but
rather how convenient they are. Those who go down, don't go down based on how
much they break or skirt the law but based on their connections to power
failing.

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pasbesoin
I really dislike this aspect of our system, where participants (e.g.
prosecutors) have so much motivation to build a personal career, over purpose
to serve justice evenly, or sometimes even at all.

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vinhboy
Do you really think he would risk something like this for a measly $31M
investment? The guy is worth like $17B.

Maybe this is why I am not rich. I just don't have the right mindset.

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cepth
Keep in mind the scores of business icons who have been caught insider trading
seemingly insignificant amounts of money.

Martha Stewart “avoided a loss of $45,673 by selling all 3,928 shares of her
ImClone Systems stock on December 27, 2001, after receiving material,
nonpublic information from Peter Bacanovic, who was Stewart's broker at
Merrill Lynch.” (wiki)

The Galleon Group case ensnared Rajat Gupta (former head of McKinsey), who
provided insider information that helped Galleon Group net a $17 million
profit by tipping them off about Warren Buffett’s investment into Goldman
Sachs during the 2008 financial crisis. Galleon Group’s owner, Raj Rajaratnam
was a billionaire at the time of the insider trading.

SAC Capital (Stephen A Cohen’s firm, now known as Point 72) was charged with
using insider information to generate $275 million in profits and averted
losses. Cohen is a multi billionaire.

I recommend reading The Chickenshit Club. Given the institutional and resource
constraints on regulators and prosecutors, the odds that you actually are
punished are slim. Leaving aside any potential political machinations,
behavioral economics resource has shown that humans generally value avoiding
losses much more than making more money. Behavior like the endowment effect
comes into play here. Bottom line, what may seem like pocket change for
billionaires may cause “irrational” behavior.

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dforrestwilson
Galleon and SAC Capital are not good examples. Their entire business models
are built around gathering insider information and profiting.

These 2 instances in which they caught red-handed were simply the strongest
cases that the U.S. government could bring.

Cohen is a multi-billionaire because he built a business which is designed to
launder insider information into "clean" information without implicating
himself or his lieutenants.

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cepth
I’m not sure that it’s charitable to characterize either fund as being “built
around gathering insider information and profiting”.

Raj Rajaratnam started at Needham & Co. in 1985, and worked his way up to firm
president in 1991. He eventually bought the firm, and renamed it Galleon
Group. If you look at the history of returns for Galleon, the most lucrative
years were 1999 through 2002. Raj rode the tech bubble up, and got out before
it burst. You don’t generate outsize, 90%+ returns solely on the basis of
insider information.

As for SAC, for the vast majority of his career, Stephen A Cohen was a
momentum trader in the style of Paul Tudor Jones. If you read the book Black
Edge or watch the PBS documentary To Catch a Trader, at some point in the late
90s to early 2000s, Cohen started employing expert networks. The use of expert
networks was legal at the time, and remains a grey area. Obviously, at some
point Cohen crossed the line into outright insider trading.

My point for both of these examples was that both men were overwhelmingly rich
by the time they got involved in insider trading. We can speculate on why they
did it, but to suggest that they made their first hundred millions or billion
with insider trading is inaccurate.

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dforrestwilson
I have read Black Edge, and Cohen's early scrape with insider trading in 1980s
would seem to imply that his entire career has been based on getting insider
information would it not?

As to Raj you may be right I haven't followed as closely.

Whether insider trading should be illegal and what the lines are exactly is
absolutely open to debate, but it seems clear that Cohen at least built his
business to maximize his insider information edge.

Matt Levine has some good writing on the subject of insider information for
the curious.

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JudasGoat
I suspect with the present government He is "too big to fail".

