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Federal judges or their brokers traded stocks of litigants during cases (wsj.com)
181 points by colinprince 86 days ago | hide | past | favorite | 114 comments



Everything's corrupted. Pretty much every branch of government is rife with corruption. Even the enforcement is corrupt. Money has infiltrated everything and justice is now truly blind.

And if by some miracle you're tried and found guilty, you can even buy your way out of serving any time and you can even buy a presidential pardon and have your crime expunged.

If you're rich, vast majority of laws simply don't apply to you. Yet there's so many laws on books and many of those laws are so vague that an average person commits several felonies every day. [1]

[1] https://www.wsj.com/articles/SB10001424052748704471504574438...


> ...justice is now truly blind.

(I think you are misunderstanding this metaphor, as Justice being blind is actually supposed to be good: it means Justice makes decisions without bias or regard for who the parties are, only able to analyze the facts. A corrupt court that benefits some people over others based on connections or group affiliation would imply Justice not being blind.)



Time to start popularising 'Justice is 20/20' then!


Kenneth Lay, Bernie Madoff, Martin Skreli, and countless others served hard time.

There is no such thing as a corruption-free government because it is made of human beings but I think that the US Govt has definitely trended in the right direction over time. I hope the trend continues, more transparency is a good thing.


You've got it backwards. Shkreli served time because of public opinion and the things he revealed about the medicare drug pricing [1,2,3]

Shkreli's case shows the partiality, politics and bias embedded in our justice system. He was unable to even serve the remainder of his sentence under house arrest as very reasonable covid safety precautions despite his crime being entirely nonviolent.

The justice system is in many ways the government's instrument of vengeance. You can clearly see this with O.J. Simpson's 33 year sentence in 2008 for armed robbery. Essentially, a new fluff case was used to dole out an improportionate sentence. as retribution for the murder of Nicole Brown and Ron Goldman. [4,5]

The truth is that Shrkeli pissed off a lot of people in powerful places. None of the investors wanted him tried because he ended up making them all a lot of money.

[1] https://youtu.be/L-U1MMa0SHw

[2] https://youtu.be/2PCb9mnrU1g

[3] https://youtu.be/hjAQOWSP3Cc

[4] https://youtu.be/BB4ss7q5X08

[5] https://en.wikipedia.org/wiki/O._J._Simpson_robbery_case


Agreed. Shkreli was dumb/honest enough to say "this is what I've done with your broken system." If he had pulled a Sackler-style, "I did this for your own good" lie (complete with the requisite bribes/speaking_fees for industry "experts"), he wouldn't have earned the same ire from the media or regulators, imo.


Indeed, moreso pride and lack of wisdom. Perhaps a bit of martyrdom. Shkreli liked playing around with these people who literally wanted to slay him. I don't think he understood how seriously evil and petty boomers can be, and how most judges are from that generation. He took one for the team in a sense, showing how the justice system serves as the instrument of vengeance for the executive and legislative branches. He's by no means dumb [1,2] but yes, honest to the point of being blunt. Very much in the spirit of Mike Tyson who is also extremely intelligent but often portrayed as a dolt. [3,4,5]

[1] https://youtu.be/VI_riscmviI

[2] https://youtu.be/poyf3Cnb-MQ

[3] https://youtu.be/B9abU6r80P4

[4] https://youtu.be/OOhdx1TLutw

[5] https://youtu.be/KaMb3GqKXb0


Someone counter to popular narrative, George W Bush's administration prosecuted more corporate criminals than both the Clinton and Obama admins combined. This means even more when you remember that Enron was a financial backer for the Bush campaign and GWB personally knew many Enron execs. (Enron was HQed in Houston).

https://www.ineteconomics.org/perspectives/blog/chanos-is-a-...


> Money has infiltrated everything

Worse, money is protected speech, and using it to buy influence is protected by the law!


Exactly! Bloomberg spent $1B on his nomination for president and… it failed entirely.


I don't think he had any expectation or interest in winning. He bought his way in to divert votes from other nominees. Spend a billion to save 10 billion.


Why not just spend a billion on the Biden campaign then and save yourself the campaign trail headaches?


because it wouldn't work as well as what he actually did


Hardly evidence of anything... It's one thing to spend money, another thing entirely to spend it properly.


This is the exact attitude I’m talking about. It happened with AB 5. Money is just used as an excuse for when voting doesn’t go the way someone expected or wanted.


When that happens, people will have even less recourse against media, internet and social media companies using their power to influence.


What do you mean, "when that happens"? It's the law today.


I must have intended to reply to one of the replies to you calling for it to be outlawed.


bribes/lobbying should be illegal... please get a referendum going on this subject


The challenge that the USA faces is the people who have the power to change it are the very ones who benefit the most from it.

There are MANY established institutions in the USA that will fight tooth and nail not to change, because the established players are getting exceedingly rich the way things are now, to the detriment of everyone else.


Yeah. How is change supposed to come when they control the system that's supposed to bring it about? If you try to fix things outside the system, you essentially become a terrorist and the government gives itself license to do unspeakable things to you.


Lobbying is essentially a constitutionally protected right, right? Comes from the right to petition our government.


Why do you want to make it illegal for me to contact my representative and voice my opinion on upcoming legislation -- that's also lobbying.


As long as id does not involve money direct or indirect between "lobbyist" and the official sure go and convince your rep. Just do not promise cushy job later or for relatives or any other creative ways to buy your politicians.


The negative influence of Big Money in politics has been proven to be vastly overblown. Small dollar donations ar much more dangerous as they tend to come from the most engaged & partisan members of society and encourage pols to be much more extreme in their rhetoric


Are you not watching Sinema and Manchin? Two people (maybe another half dozen, quietly) holding up legislation that much of the country wants to pass


You think they're the only two Democratic Senators or house members that don't want this legislation?

I don't. They're cover and the lightning rods for other reps in swing states.

Also, a large chunk of the country does not want this legislation to pass (I'd even go as far as to say potentially a majority).


Two people (maybe another half dozen, quietly)

No, I believe it is more than two democratic senators, I don't know how many. That is why I put half dozen, in parenthesis.

Poll after poll shows the legislation is popular, even in Manchin's own state. Same in Arizona. What provisions of the bill do you disagree with?


Individual components polling well does not necessarily mean the package as a whole will poll well. Also Americans are incredibly fickle (look at polling associated with remaining in Afghanistan).

I don't support expansion to medicare or medicaid (although the ability to negotiate on drug prices seems reasonable). We are already facing a looming funding crisis for social security & medicare and I don't think it's reasonable to put even more debt on future generations.

If the US wants a European style social safety net, the US middle class is going to need to help pay for it which I don't think they're willing to do.


They're the only two holding it up


It's very radical and divisive legislation opposed by much, if not the majority of the nation.

Blocking this type of radicalism is why the Senate exists. You saw the same thing happen during President Trump's administration, when an extremist tax bill was proposed, and much of the radicalism in that legislation was removed by the same senate, with the same howls about obstructionism being levied at moderate Republican senators from the GOP base.

Basically go down the line of the major legislative efforts and you see extremist stuff being passed by the house, and then toned down or dropped in the Senate. And not only legislative efforts, but the entire history of the two bodies, the Senate is usually the moderating force.

Thank God for the Senate.


Can you explain what is radical and divisive about the legislation?

Negotiating drug prices is bad? Asking corporations (that are making record profits) pay their fair share of taxes is radical? Two years of free community college is divisive? Including dental, vision in medicare is bad?

Can you point out and explain what parts of the bill is divisive and bad? And why?

And please don't say the amount is too high. 3.5T is over 10 years, the US govt spends 750B on military, in a single year.


> Negotiating drug prices is bad?

No, that's fine. It's the 3.5 Trillion in pork and expansion of government powers that's the problem.

> Asking corporations (that are making record profits) pay their fair share of taxes is radical?

This is a weird soundbyte. Please stop it with "pay their fair share". Increasing IRS snooping powers on all bank accounts of private citizens is bad and does nothing to promote corporations "paying their fair share". There are lot of orwellian aspects to this reform. A simple VAT tax and elimination of corporate taxes would be more fair and also less intrusive. That would also bring us more inline with a european style tax system and eliminate corporate tax avoidance. It's also a proven system that works well in Europe.

One thing the left needs to understand is that corporate taxes are basically sales taxes. So if you are going to be applying a national sales tax, do a VAT. That will immediately solve your foreign tax shelter problems because you are taxing sales and not "profits", which are subject to all sorts of accounting gimmicks. Sales are clear and they happen in a specific geographic area. Just tax sales net of domestic input costs. This is actually one of the policies floated in the Trump administration but was of course never adopted seeing as how corporations opposed it (for obvious reasons).

> Two years of free community college is divisive?

It's terrible policy. We need to cut government subsidies of higher education in half and finally open up a system of trade schools for the majority that shouldn't attend college. Trade schools, and not two years of community college, is what we need.

The problem with US education spending, like with US healthcare spending, is that we are spending twice as much as the OECD (as a share of GDP) and still the private sector is left with huge bills. And we have bad outcomes, graduating students without marketable skills and that do not match the needs of our economy. Again, here we should follow the European model rather than giving more subsidies to our system.

That means free higher education and free trade school, and this can be funded by slashing university budgets by 2/3 and diverting funds towards the establishment of trade schools, banning schools from charging anything to students if they accept government vouchers. Each voucher should be for 11K/year. Students must complete their degree in three years, and standards should be raised so only qualified students attend university rather than teaching remedial subjects in our expensive university system. Non-academic staff should be reduced from the current levels of 3 non-academic staff per academic staff to 3 academic staff per non-academic staff. That reduction in non-academic staff and reduction in required courses would allow for a massive slashing of university budgets, bringing them inline with what is spent in Europe. And we'd get smaller class sizes and free universal education to boot. None of that requires a dollar of extra spending beyond current levels.

But merely subsidizing a bad system now entrenches it and makes it harder to reform in the future. You have the same problem with healthcare.

> And please don't say the amount is too high. 3.5T is over 10 years,

It's not the amount, it's that it's all deficit spending and the actual programs are mostly harmful rather than helpful.

One problem with the left is they think it's always 1933. The only economic model in their mind is one where there is deflation and millions of unemployed with nothing to do, so they always call for a "New Deal". Well, we are in a tight labor market and an inflationary economy, so now is not the time to run expansionary fiscal policy. You would think this would be obvious, but alas it doesn't stop anyone from calling for projects that create "more jobs". Now if you want to reduce defense spending and increase spending on something else, we can discuss that. I'd like to reduce defense spending as well, but another 3.5 Trillion in stimulus is a terrible policy in the current economy, and the objects of this spending are the corrupt bureaucracies that need to be cut, not increased.

So yeah, it's really a terrible bill that takes us in the wrong direction. I'm OK with negotiating for cheaper drugs, and few other things, but the actual spending of money and most of the policies are just awful.

Now I understand that a lot of my proposals are also radical. But we need radical reform. And I also understand you can't get a radical bill passed when you have only a three seat majority in the house and a 50-50 Senate. It's insane to think you can. You won't be able to. So in this current stalement it's much better to pass no bill than to pass a bad stimulus bill in an overheated economy. At least passing no bill would avoid making things worse, which is what this bill does. The reason we do not have education or healthcare reform is because there are too many people employed in these industries who wield too much political power and are able to block reform. Therefore I oppose anything that increases employment in already bloated fields, as it makes the reform problem that much harder.


You flipped the tax thing. Permanently remove the personal income tax. If your master owns the fruits of your personal labor, then you are slaves.


I learned a lot from this comment. Thank you.


Where is the proven evidence of this? I find this very difficult to believe, otherwise.


Big money pulled their donations from the GOP after 1/6.

Look at [Marjorie Taylor Greene's fundraising](https://www.opensecrets.org/members-of-congress/marjorie-tay...)


It's time to repeal the First Amendment. It's probably time to repeal the entire Bill of Rights, and replace it with a framework that allows the government to restrict the exercise of rights when and as much as required to protect public safety or the mechanism of democracy.

All functioning democracies (which the USA is not) have such a framework in place. In Canada it's famously called the Notwithstanding Clause.

Well, maybe not all. We can keep the Third Amendment as a souvenir.


I can’t tell if this is sarcasm. The solution to corruption in government is to give even more powers to the government to restrict the exercise of rights?


The fact that they’re suggesting we keep the Third Amendment (which is, for all intents and purposes, useless), but get rid of the rest leads me to believe it’s sarcasm. If someone was serious about “repealing” the Bill of Rights, they probably haven’t read it and don’t know anything more than the First and Second.


Oh no, I think the entire Constitution actually needs to be rethought if we intend to do something about corruption in the system. It's clear that the USA is a failed state -- the Constitution hampers the government from doing good, necessary things (like implementing universal health care, strong consumer and worker protections, protecting against hate speech, etc.) while allowing corruption to run rampant. It needs to be replaced. Something like a proportional representation, multiparty parliamentary system. While we're at it we may as well rejoin the Commonwealth, because the Crown has one non-ceremonial power that can be used to fight corruption, that no person or body has in the U.S. government: the power to disband the government and force the institution of another by democratic means.

If you think this sounds familiar, you're right: New Zealand is practically an ideal model of how to form a modern, practical, democratic government that reasonably respects personal freedom and public safety and security. Their example should be followed elsewhere, especially in the USA.


In case your message is not sarcasm - The way Notwithstanding Clause was used and / or threatened to be used by Ford for example had nothing to do with the democracy but everything with the Government pushing their agenda.


It's not just money, it's also ideology. Rule of law is increasingly looked at with distain in favor of rule by arbitrary authority. At some point deontological liberalism has been overtaken by utilitarian pragmatism. The thing is that deontological rule of law is the exception throughout human history, and utilitarian pragmatism is the norm among unremarkable populations. It's not exactly easy to reclaim.

When I hear people around me thinking it's a good thing when a judge rules in a way that nets the outcome they want, regardless of whether or not it was done so in accordance with the law, it hurts. Somehow, people fail to realize that rule of law is the single greatest defense against tyranny that we have. Short sighted pragmatism.


> people fail to realize that rule of law is the single greatest defense against tyranny that we have.

This purist view ignores the fact that not all laws are good. Many laws are in fact bad, and it’s important for them to be challenged.

As an example, many here would agree that the DMCA is a bad law. It’s a law that is generally only enforceable by wealthy players.

There are many bad laws on the books. Those laws do not get equally applied to everyone in society. The fact that we have bad laws, implies that applying them will lead to bad outcomes. This is partly why having an unbiased appellate court to review the laws and throw out the bad ones is so important. Sadly much of the appellate court has also become corrupted, but at least the system is there to ideally correct bad laws and allow for blind application of justice.


Blind application of justice is rule of law. And nobody is saying there aren't bad laws; there are plenty. We just have a system in place which dictates where the law is created, where the law is modified, and where the law is carried out. Our legislative branch is writing the code, theoretically downstream from our democracy, theoretically constrained by the meta layer that is the constitution. I don't want my code to be compiled only for the execution layer to suddenly decide that the code I wrote isn't what I meant. What if the execution layer is a racist? What if they stand to benefit financially from a particular ruling, as the OP says? What we should want is the judiciary acting like a compiled executable. If we're going to argue that a law is fair or not, let's do it with our democracy through some pull requests, and not give our executable the leeway to decide if they personally like the code they're meant to carry out.


Laws are imperfect and often there are situations when applying the law as written / by precedent will ruin person's life in very humanely unjust way. In this case if I was a juror I would say fuck the law and go with the nullification. Unfortunately it does not happen often enough.

Also I think if every law was strictly enforced the functioning of society would stop. This tells something about the whole system. Some fixing is required.


Bad laws should be fixed by legislation, not by arbitrary judicial authority.


That is a nice theory that sometimes work and sometimes does not


Same is true for arbitrary judicial authority.


> Rule of law is increasingly looked at with distain in favor of rule by arbitrary authority.

This happens right here on HN. It seems that nobody here wants trials for Snowden or Assange for instance.


Hyperbole doesn't contribute to the discussion.


None of the prior comment is hyperbole. Everything has happened, multiple times that we know of.

"Three Felonies a Day"

https://www.amazon.com/Three-Felonies-Day-Target-Innocent/dp...


The real problem is you have a culture where people think the law is the edge of what is acceptable. Whether it is legal or not, I would not be punting on stocks that I was a judge for, it simply stinks and shouldn't be done.

There's probably a lot of things that are formally legal but corrosive to society.


> There's probably a lot of things that are formally legal but corrosive to society.

Plus the process of corruption is slow and creeping. A generation doesn't know whats it like growing up a generation or two before, so the current state of affairs is taken for granted. At some point, the idea of a high-trust society where people don't need to lock their doors and children can just roam the neighbourhood freely becomes a faint memory and unreal utopia. Starting a family in their twenties, the prospect of home ownership, and being able to do so on a single income has already become unimaginable.


The latter is not unimaginable to (and done regularly by) millions of people living in lower cost areas of the country.


It's nice to be able to blame something on a culture, but the reality is that some percentage of people are somewhere on the spectrum of morality where they are prone to doing this. I don't imagine judges are a particularly amoral group, despite being lawyers, but politicians certainly are. I'm always dumbfounded when people want to give politicians more power.


>> think the law is the edge of what is acceptable. > particularly amoral group, > but politicians certainly are.

To be fair, if all politicians were always morally rooted in the center of the law, nothing would ever change. No marijuana, no gay marriage.

Or more appropriate: There’s a certain overlap of laws (and constitutional rights) that blur the edge of law (here: pursuit of happiness for the judge’s vs. corruption of justice).


They do this whole ritual about Jury Selection, you can't be a Juror if you've got family in law enforcement, etc etc.

Could we have a Jury, once assembled, apply those same rules tot he rest of the Court? "Your Honor have you ever held ownership in the companies involved in this case? Ever been married or intimate with any of the parties in this case?"


There are ethics laws for lawyers and judges. The problem is: the enforcer of those ethics laws are partially the judges themselves. It’s the same issue with cops breaking the law; cops don’t rat on/arrest other cops.


It seems like we have a lot of social problems like that; we have laws about them, but the enforcement became spotty somehow... Some people can start an online bank, or have a "taxi app"; and it's OK; but everyone else has the laws against it enforced.

Perhaps some of the conspiracy theorists talking about the undermining of the prosecutor and court systems since the 90's have been onto something.


Surely superior judges make the decisions relating to inferior judges? It’s hard to believe judges at the same level in the hierarchy are making those decisions for themselves in any capacity.


How about treating judges and legislators as if they were insiders of every public company and applying Section 16 of the Securities Exchange Act of 1934 to them?

Section 16 currently applies to officers, directors, and anyone who holds 10% of the stock of a company.

These people have to disclose all of their trades, and they are not allowed to make any profitable "short-swing" trades in the stock. A trade is a short-swing trade if it occurs within 6 months of a trade in the opposite direction.

Section 16 is brilliant in how it is enforced. It allows any shareholder to sue the short-swing trader. The plaintiff does not have to have been a shareholder at the time of the trade. They only have to be a shareholder at the time of the suit.

If the plaintiff wins the trader has to return all short-swing profits to the company and pay the plaintiff's attorney fees. Because the people covered by Section 16 have to report their trades, and because there isn't really a defense for short-swing trading, it is an open and shut case.

The data is available from the SEC in electronic form, and there are lawyers who get it and do automated checks to find short-swing trades. Then it is an easy matter for them to buy a share if they don't already have one, sue the short-swing trader, trivially win the open and shut case, and collect attorney fees.

If that wasn't enough to discourage insiders from short-swing trading, Section 16 provides more discouragement by being brutal in how it defines profit from a short-swing trade. Consider this sequence of trades by a Section 16 insider:

  Jan 1: buy N shares at $100/share
  Feb 1: sell N shares at $90/share
  Mar 1: buy N shares at $80/share
  Apr 1: sell N shares at $70/share
The person is clearly a terrible trader. That sequence of trades has lost them $20/share.

But Section 16 doesn't look at the overall results. It just looks it individual trades and tries to match them with individual trades going the other way within 6 months (before or after) and if the sell is higher than the buy that is short-swing profit.

Section 16 sees the above trades as a short-swing profit of $10 x N from the purchase on Mar 1 and the sale on Feb 1.

The net result then for the insider who made those ill conceived trades is that they lose $20/share on the trades themselves, and they end up having to pay an additional $10/share to the company, and pay the attorney fees of whoever managed to file first to sue them.


I love this idea.


Okay, but first send the judges and politicians who did this to gitmo.


Technically these judges should have recused themselves, but is it really a big deal that the judges (or their families) had financial advisors or stock brokers held shares in companies they were probably not even aware of was a defendant? The real question would be how much did these judges make by buying or selling those stocks during the cases compared to rest of their portfolio. I would imagine it’d be negligible


Needs to be regulated Asap. Corruption is cancer.


The US needs a blanket federal law, perhaps even a constitutional amendment, that precludes any publicly elected official or appointee at any level from directly owning individual stocks. How could anyone possibly argue against that?


I can think of at least three plausible counter-arguments:

1. That's overly restrictive. Why not let them own individual stocks in, say, a blind trust?

2. It's a free country. It's up to the voters to decide if they want to elect someone who profits from their position. What is needed is a law requiring public disclosure, not prohibition.

3. If you force people to divest their portfolios before taking public office you will reduce the pool of people willing to serve.

This is not to say that I disagree with the policy position, only that it's not the slam-dunk you seem to think it is.


2. Think of it like term limits. We don't let people sit in office forever just because it's a free country. No, these are constraints implemented democratically by voters to protect against bad outcomes that aren't well addressed by future direct voting.

3. You would reduce the pool of people who have corrupt intent. Owning individual stocks isn't more profitable than owning ETFs.


Owning individual stocks (even temporarily or unvested) is a substantial fraction of compensation of many people that I want to be able to participate in local politics.


Owning individual stocks is the same expected value than owning ETFs for almost all retail investors who are non-corrupt. Studies have looked at this and shown that regular investors in single stocks consistently underperform. So there's no real financial reason (in expectation terms) to do so unless they have corrupt intent. Of course someone that just got rich off NIO or GME probably differs but that doesn't speak to expected value which is all that matters for decision making.


Many FAANG(-N) employees receive more in compensation in the form of shares of an individual company than they do in cash. I don’t want to force them to quit their job (or cut their comp by more than 50%) if they want to contribute in local politics.

If this were broadly adopted, companies would be forced to switch to all-cash offers, to create long-term incentive plans that don’t use something the legislation defines as shares, or just be content to exclude politically active people from being employees. Some might be happy with that last outcome.


The original phrasing wasn't "contribute in local politics" but "take public office". Presumably if you take public office you give up your FAANG employment. I don't think anyone is saying you can't vote or petition government for the redress of grievances if you own individual stocks.


Unless it’s been edited in the meantime*, the text above is “precludes any publicly elected official or appointee at any level from directly owning individual stocks”.

Many publicly elected or appointed roles are part-time (school board/committee, city council, etc.) Even MA state legislators make only $70.5K/yr and MA is one of the highest-paying states for that job. Many of them maintain another full-time job.

https://ballotpedia.org/Comparison_of_state_legislative_sala...

* https://news.ycombinator.com/item?id=28966192 (edit window is 2 hours)


Yeah, you make a good point. I'd be pretty happy if they just implemented it for full time office holders only (senate, congress, judges) which aren't going to be having jobs on the side that pay equity.


I own my own company. That is a very specific stock and you are saying I can't own my business and run for office? Stocks aren't just for trading on the nyse.


1. There is no way for a fairly normal person working a fairly normal job (probably service industry) to verify any of the blind trust stuff and past politicians have helped make a mockery of the whole thing. To be fair, though, there are other ways. You can reform things so that there are minimum holding times for stocks alongside rules that make selling stocks take more time. If you need to hold onto the stocks for 6 weeks after you say you want to sell, you are going to have a harder time selling. You can also restrict times officials can sell.

2. Again, how is a normal person - say, a retail employee - ever going to find out about this? Even with public disclosure, all folks need to do to hide their doings is to make the language in the disclosure full of technical jargon instead of everyday language.

3. That's a bonus, not a feature. Maybe it'll encourage normal folks to take office more often - but of course, we'd have to do other changes to make that happen.


>If you force people to divest their portfolios before taking public office you will reduce the pool of people willing to serve.

Dissuading the wealthy from seeking office sounds like a feature, not a bug to me.


> Dissuading the wealthy from seeking office sounds like a feature, not a bug to me.

Around 55% of Americans own stock.


"The wealthiest 10% of Americans own a record 89% of all U.S. stocks" — CNBC

https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-...

If you aren't one of that "wealthiest 10%" it would not be difficult to divest your stock holdings in exchange for an index fund.


I would presume that almost everyone qualified to be a federal judge to be among the wealthiest 10% - the median lawyer income is approximately 90-th percentile, and I would presume that the seniority and skills needed for such a position would disqualify most of the less experienced and/or weaker lawyers.


Income is not the same as wealth. They are correlated, but you're blurring lines. The wealthiest individuals accrue a negligible amount of their wealth from income. And the power law relationship between wealth and stock ownership doesn't end when you cross the 90th percentile either.


That includes things like index funds. The vast majority of people do not own individual equities.


A lot of high-powered jobs come with strong restrictions and controls around stock ownership/trading. Does not seem to dissuade people from pursuing careers in banking or strategy consulting, for example.

They are not blanket total bans in most cases, but single name stuff is often very restricted, broad market less so. Also does come with transparency requirements.


Well...

1. Too bad. There are plenty of other good investments out there.

2. Too bad. The removal of incentives to do slimy things like the ones that are subject of this article is the greater good here.

3. Too bad. Maybe those people who choose to serve will be those who aren't in it to fleece the system of every dollar they can.

I'm not sure you'd find my "counterarguments" any more persuasive than I find yours. I'm more interested in what the systemic consequences of such a policy would be, and, it seems to me that they tip in a direction that removes incentives to be corrupt, which sounds pretty darn good to me. I care a lot less about the effects on people who are currently in the position to exploit the system.


Guess who writes the laws? People who are neck deep in insider trading to the point where the speaker of the House outperforms some of the best performing hedge funds. Don't hold your breath on this one. And the law would need to be signed by a dude whose son "sells art" for $75K apiece and takes jobs he himself admits are only offered to him because he has the right last name. And finally, if by miracle such a law were to be passed and signed, to enforce it you'd need to go to a judge who's also corrupt as fuck and trading stocks from the bench, and whose mortgage on his third beach home would be jeopardized if he was to agree with you. It's rotten all the way through now.


The husband of the person you mentioned was already well off before she was in politics.

Better yet, it was because her husband success that she worked for 20 years for free for the party.


He's much better off now. A genius grade trader. It's a goddamn miracle. Warren Buffet doesn't even come close to such prowess. What's funny is everyone knows these are pretty damning facts that are not good for the country in the long term. And yet my posts will be flagged anyway.


Waren Buffet doesn't even invest in tech.

Something her husband did before she was speaker and he already had much success before.


He does. Berkshire owns a ton of Apple (114 billion dollars worth) and some other tech/pharma companies. But hey, if you think insider trading is so wonderful and ethical, let's make it "fine" for everyone and abolish stock trading windows at major corporations, as well as restrictions on execs. Why should only congresspeople be able to partake?


Oh, come on. 1 tech stock in his portfolio... ( more a hardware company though)

He likes bank way more. .


Not only unhinged, but whiney too. A true Renaissance man!


> How could anyone possibly argue against that?

The very basis of self government (citizens being in charge) is allowing people to run for office who are every day people. This idea would require anyone who is even a part owner af a tiny business to divest in order to run. Additionally, a lot of common small businesses have no real value if the owner doesn't come with the business (a solo law practice is an example)... oh, and trusts are corporations... so this idea sounds wonderful but is very exclusionary.


No business owner could be in office? Like someone who owned stock for 20 years with no plans to sell couldn't run? Seems harsh. I think limited trading is what you mean (buying and selling).

Insiders at companies have limited windows to trade. Makes more sense.


If we just get the people who write and enforce the laws to pass a law that stops them from being corrupt the corruption will end.


One argument that I can think of is talented people will instead gravitate towards private industry and are disincentivzed to become public servants. Not owning invidual stock can be common shares is pretty broad. Or otherwise we would have to define what class of investment instrument should be banned. Do we also prevent buying private company shares? What about other financial derivates such as options and futures where you technically don't own the underlying stock? Do we limit real estate investments as well? If they earn a salary, where could they invest their savings? If we allow real estate investment, then public servants (1.8M US Citizens) would blow up the real estate market. There are so many secondary and tertiary effects, that would have major consequences to the economy and the functioning of the government. Not allowing any investment opportunity means they would sucuumb to the inflation rate and cannot retire.


Have you even seen the kind of people who become public “servants”? Who exactly would you classify as talented?


Both my bosses. They each head a public art academy. Both are incredibly talented, motivated people. They serve the public as best as they can. The same goes for several of my colleagues.


My father, my grandfather, my brother, many of my friends...


Uh, Trump is a father, grandfather, brother, friend (?), to people. That doesn’t really prove that someone is talented.


I didn't say "a father or brother or whatever". I identified specific people.


> How could anyone possibly argue against that?

Arguing against that is easy.

The elite have so many better ways to profit from their positions that outlawing stock ownership is laughably naïve. Trading stocks against knowledge you obtained from your government position is an easy way to get busted, so you may assume the people caught up in this represent merely the profoundly stupid; the smart elites don't get nabbed in such simple minded schemes. Yes, there are very stupid federal judges; their appointments are a product a political haymaking that has their actual competence way down the list of priorities.

So the best reason I can think of to oppose your plan is simply that it's a futile waste of time. If you're serious about meaningful efforts to hinder corruption think in terms of transparency. Give the electorate the means to know who is bought and paid for by whom. Without that you're wasting your time.


> So the best reason I can think of to oppose your plan is simply that it's a futile waste of time.

Time is a pretty small consideration here.

One can and should apply many means to lessen corruption. Transparency is certainly important, but no means is going to cover all cases or be 100% effective. Reduce the possibility of conflict of interest and increase transparency.

The problem with transparency, if you're relying on democracy to do the rest, is that any sufficiently clever corruption scheme is simply not going to be understood by the public you're relying on to oppose it. If you give them an explanation in detail they mostly see simply that it's detailed. It looks no different from a conspiracy theory to most people, who will barely be following the issue anyway. Most voters are low information voters. The information they need is which party backs which position. They in effect vote as they're told, not because they're stupid but because none of this interests them.


Naive question: If you preclude a politician from owning stocks, can't they execute such trades via an off-the-radar friend? And receive profits via "gifts".

I imagine this is already illegal? But isn't it harder to prove if done right?


As others have said, a blanket stocks prohibition might make the public sector uncompetitive.

Blind trusts seem to be quite a bit too permissive to me.

Offer them the performance of a stock index fund on their stock holdings, for the duration of their public mandate.


I don’t need the local dog catcher to be blocked from owning shares in Apple if they want to.

I don’t want my local Google employees to be prohibited from running for city council or school committee.


Ban trades while they have the position, not ownership. If they had it long before they got the position they shouldn't have to sell it just for the sake of serving the country.


Just as soon as we prohibit homeowners from serving in local governments.


Why make it so confined? Do not allow them to profit from their position.


This is why small government is so important.


Small government isn’t immune from corruption. City level has some of the worst corruption.



Matt Levine has noted in modern America everything is securities fraud; the most egregious of crimes are being prosecuted as securities fraud rather than whatever the actual crime was.

How does security fraud apply to this? Or is that why it happens? You can't point to a "shareholder loss" and all other stakeholders in the company, the legal system and society don't get enforcement when they are the victims of this kind of crime? The company can't be held responsible if a corrupt judge acts corruptly (or impersonates someone who is corrupt displaying a stupidity that should bar them from any position of responsibility), if that judge did not involve the company directly in that corruption.




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