“Victimless” Insider Trading? Really, Mr. Jenkins??
It’s hard to take seriously Wall Street Journal columnist Holman Jenkins’ latest broadside against prosecuting insider trading when it contains whoppers like this one:
“Whoever was a buyer when SAC Capital was selling would have been a buyer anyway, whether SAC’s motive in selling was inside information or the maundering of an astrologer.”
–Holman Jenkins, “The High Cost of Ignorant Stock Prices“; The Wall Street Journal (11/30/2012)
Come again?
Combating “Ignorant” Stock Prices
If you weren’t following the story, back in 2008 SAC Capital’s Steven Cohen 
ferreted out from a doctor in the know that Elan’s experimental Alzheimer’s drug was in fact a bust.
First, he managed to dump his shares, avoiding a huge loss.
Then, he apparently shorted the stock, scoring a fortune when it plunged after the news became public.
“Outperform the market,” indeed.
Buying Mr. Cohen’s About-to-Plunge Elan Shares
If you knew what Cohen knew about Elan’s drug, would YOU have been buying when he was (very quietly) selling?
Nah, I didn’t think so.
Which is why Jenkins’ argument that insider trading is a harmless activity that actually promotes efficient (vs. “ignorant”) stock pricing is the ultimate canard.
On the contrary, I can’t think of a single practice that does more to undermine public faith in the markets — and therefore, their utility — by reinforcing the (by now) broad perception that insiders will always manage to pick the pockets of average investors.
See also: “Victimless” Insider Trading”
P.S.: Also hard to take seriously?
Any publication that countenances such sophistry and twisted logic on its Op-Ed pages.
